Question

Macy’s purchases model 505 straight-leg, blank ink denim jeans for women from Levis Straus & Co and sells them to consumers in 185 store locations across 35 U.S. states. Levis Straus & Co’s cost-of-goods-sold for each pair of these model 505 straight-leg, blank ink denim jeans for women is $21.85. Levis Straus & Co sells these model 505 jeans to Macy’s for $34.50 each. Macy’s in-turn sells each pair of these jeans to consumers for a suggested retail price of $58.49.

What is Macy’s mark-up, is $US dollars and %, on each pair of model 505 straight-leg, blank ink denim jeans for women from Levis Straus & Co sold at the suggested retail price? Assume Macy’s includes model 505 straight-leg, blank ink denim jeans for women from Levis Straus & Co in the end-of-year sale (November 1st to December 31st) when every item in the store is discounted by 17.5% off the suggested retail price.

What is the discounted price Macy’s customers will pay for model 505 straight-leg, blank ink denim jeans for women from Levis Straus & Co? What is Macy's revised Mark-Up % after applying the 17.5% discount? Assume Macy’s sells-through a quantity of 21,333 model 505 straight-leg, blank ink denim jeans for women at the discounted price during the end-of-year sale.

What is the total revenue and, separately, gross margin in $US dollars, for Levis Straus & Co?

What is the total revenue and, separately, mark-up in $US dollars, for Macy’s?

Answer 1

Answer:

Givrm Data

Macy’s purchases model 505 straight-leg, blank ink denim jeans for women from Levis Straus & Co and sells them to consumers in 185 store locations across 35 U.S. states.

Original cost of denim to Levis = $ 21.85

Cost at which given to Macy = $ 34.50

Retail price of Macy for denim = $ 58.49

Mark up is the difference between the cost at which goods are acquired and price at which they are sold.

Mark up in $ = $ 58.49 - $ 34.50

= $ 23.99

Mark up in % terms can be expressed as % of cost or retail price. Both are calculated below -

Mark up as % of cost =

= 69.54%

Mark up as % of retail price =

= 41.02%

End of year sale -

Discount of 17.5% being given.

Discount = 17.5% of 58.49

= $ 10.23575

Retail price after discount = $ 58.49 - 10.23575

= $ 48.25425

Revised mark up = $ 48.25425 - $ 34.50

= $13.75425

Mark up as % of cost =

= 39.87%

Mark up as % of retail price =    = 28.50%

Given

Assume Macy’s sells-through a quantity of 21,333 model 505 straight-leg

Quantity sold = 21,333 @ $ 48.25425 Each

Total revenue for Macy = 21,333 * 48.25425

= $ 1,029,408

Total mark up for Macy = 21,333 * 13.75425

= $ 293,419.41

Gross margin for Levis will be as follows -

Cost for each jeans = $ 21.85

Price = $ 34.50

Difference = $ 34.50 - $ 21.85

= $ 12.65

Total revenue for Levis in $ = 21,333 * 34.50

= $ 735,988.5

Gross margin in $ = 12.65 * 21,333

= $ 269,862.45

**Please like it...