Question

16.

A.

A buyer needs $160,000 at retail value in stock. The departmental markup is planned at 52%. The buyer places an order for $54K cost and $106K cost retail. What are the remaining cost and retail orders to be placed, and what are the markup dollars and percent on the balance?

B.

The infantwear buyer designed rompers for her department that she would bring in at a wholesale price of $96 per dozen and a coordinating T-Shirt at $72 per dozen. She brings in 30 dozen rompers and 40 dozen T-Shirts. She plans to mark the rompers at $16 each. At what does she have to mark the T-Shirts to acheive an avergae markup of 52%?

C.

A buyer is offered a group of windbreakers for boys that have all the national basketball team logos. Some of the windbreakers are hooded while some are not. The manufacturer will sell 165 windbreakers at a cost of $25 each and 200 hooded windbreakers at a cost of $28 each. The buyer plans to sell them all at the same retail price. The departmental markup is 43%. What must the retail price be for all the windbreakers to acheive that goal? To what do you suggest the buyer round the price? Explain.

Answer 1

Question B and C are answered below:

B) The cost for infantwear buyer =

Cost of rompers = $ 96 * 30 dozens = $ 2,880

Cost of T-shirts = $ 72 * 40 dozens = $ 2,880

Total cost of above =                         $ 5,760

Average markup required is 52% = $ 5,760 * 52% = $ 2,995.2

Sale price of each romper = $ 16.

Total sales earnings from romper = $ 16 * 12 rompers per dozen * 30 dozens = $ 5,760

It means that, the sales earnings of rompers would cover cost of both rompers and T-shirts. Hence, the T-shirts are to be priced in such a way that, it would cover the mark up of $ 2,995.2

The price per T-shirt = $ 2,995.2 / (12 T-shirts per dozen * 40 dozens)

= 2,995.2 / 480

= $ 6.24 per T-shirt.

The mark up on rompers is 100% of cost. Whereas mark-up on T-shirts is ( 2995.2 - 2880) / 2880 = 4%

On an average the mark up is 52% as calculated above.

c ) The cost to buyer is -

Cost of windbreakers = 165 * $ 25 =             $ 4,125

Cost of hooded windbreakers = 200 * $ 28 = $ 5,600

Total cost of above =                                   $ 9,725

Department mark up is 43% = $ 9,725 * 43% = $ 4,181.75

Total sales should be = ( 9,725 + 4,181.75)   = $ 13,906.75

Since, both the type of windbreakers are to be sold for same retail price, the retail price per windbreaker would be -

= $ 13,906.75 / (165 + 200)

= 13,906.75 / 365

= $ 38.1000 per windbreaker

If the buyer sells windbreakers at $ 38, the markup would be -

= [($ 38 * 365 windbreakers) - 9,725] / 9,725

= 42.62%

If the buyer sells windbreakers at $ 39, the markup would be -

= [($ 39 * 365 windbreakers) - 9,725] / 9,725

= 46.38%

Since, if the sale price is rounded to $ 38, the required markup cannot be met. Hence, it should be rounded to $ 39 per windbreaker.