Sales and Markup free essay sample

oftware retailer uses a markup rate of 40%. If the retailer pays $25 each for computer games sold in its stores, how much do the games sell for? Answer: The markup is 40% of the $25 cost, so the markup is: (0. 40) * ($25) = $10 Then the selling price, being the cost plus markup, is: $25 + $10 = $35 Therefore the games sell for $35. 2) A golf pro shop pays its wholesaler $40 for a certain club, and then sells that club to golfers for $75. What is the retail markup rate? Answer: The gross profit in dollars is calculated as sales price less cost: $75 $40 = $35 The markup rate is then calculated: Markup (%) = Gross Profit / Cost *100 = $35 / $40 *100 = 87. 5% 3) A shoe store uses a 40% markup on cost. Find the cost of a pair of shoes that sells for $63. Answer: The cost of the shoes is calculated as follows: Selling Price = Cost + Markup ($) = Cost + (Markup (%) * Cost) $63 = Cost + (40% * Cost) $63 = Cost + (0. 4 * Cost) $63 = (1 + 0. 4) * Cost $63 = 1. 4 * Cost Cost = $63 / 1. 4 = $45 ) In 2009, Donna Manufacturing sold 100,000 widgets for $5 each, with a cost of goods sold of . We will write a custom essay sample on Sales and Markup or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page What is the company’s margin %? Identify a way that Donna Manufacturing can increase its profit margin? Answer: First we have to calculate the gross profit: Gross Profit = Selling Price – Cost of Goods Sold = $5 $2 = $3 Now we can calculate the margin: Margin (%) = Gross Profit / Sales * 100 = $3 / $5 * 100 = 60% Ways to increase the profit margin: Decrease cost of material Decrease cost of manufacturing Increase sales price per unit Decrease COGS )