Selling and Promotion
4.03 Solve Related Mathematical
Problems.
Opening Cash Fund
The opening cash drawer contains the
coins and currency for the day’s
business
The till is over if there is more money
than planned
The till is short if there is less money
than planned
Balancing the Cash Drawer
At end of shift, the drawer must be
balanced
The money must be counted and a
balance report filled out
Completing a Sales Transaction
The extension is the result of
multiplying the number of units by the
cost per unit
Add item amounts
Calculate sales tax and total
Completing a Sales Transaction
2 running shorts at $32.50 each
3 pair of socks at $5 each
Tax is 7.5%
2 x $32.50 = $65.00
3 x $ 5.00 = $15.00
$65.00 + $15.00 = $80.00
$80.00 x .075 = $6.00
$80.00 + $6.00 = $86.00
Types of Retail Sales
Cash sales include cash or checks
Debit cards are bankcards or ATM cards
– funds are withdrawn from the
customers checking account
Visa, MasterCard, American Express,
and Discover are examples of credit
cards
Cost of Merchandise Sold
The amount a retailer actually pays for
merchandise
Determined by quoted wholesale cost,
discounts, and transportation charges
Factors Affecting the Cost of
Merchandise Sold
Cost may be negotiable due to discounts and
terms
Discounts – a reduction in the selling price
offered by manufacturers and distributors to
their customers to encourage prompt
payment and stimulate purchasing
Allowances – free merchandise given by a
manufacturer for large orders as a means of
goodwill and to encourage future purchases
Explain the Difference
Between Pricing and Markup
Profit is the amount left from revenue (sales)
after the costs of merchandise and expenses
have been paid. Expenses include such
things as rent, utilities, and salaries.
Markup is the difference between retail price
and cost. In order for a business to be
profitable, its markup must be high enough to
cover expenses and maintain desired profit.
Explain and Calculate Gross
and Net Profit
Gross profit is a business’ income minus the
cost of goods sold.


Income for is the total of all sales for the time
period minus any sales returns and allowances
Cost of goods (merchandise) sold is the actual
amount paid to the vendors for the merchandise
Net profit is what is left after all expenses
have been paid by the business
Calculate Retail Price
The most basic pricing formula is the one for
calculating retail price when given cost and
dollar markup
RETAIL PRICE (RP)= COST(C) + MARKUP (MU)
$500
= $300 + $200
RETAIL PRICE (RP) = COST(C) / 1-MARKUP %
$500
= $300 / 1- 40%
Calculate Cost and Markup
Formulas for cost and markup can easily
be derived from the formula, RP=C+ MU.
C= RP – MU
$300 = $500- $200
M= RP – C
$200 = $500 - $300
Calculate Markup Percentage
Markup percentage based on retail. When
markup percentage is based on retail, retail
price always equals 100 %. To determine
markup percentage, divide dollar markup
by retail price.
MU% BASED ON RETAIL= DOLLAR MU / RP
40%
=
$200 / $500
Calculate Markup Percentage
continued . . .
Markup percentage based on cost. When
markup percentage is based on cost, cost
will always equal 100%. To determine
markup percentage based on cost, divide
dollar markup by cost.
MU% BASED ON COST = DOLLAR MU / C
66.67%
=
$200 / $300
Reasons for Markdowns
Buying errors. Wrong styles, color, sizes,
materials, and/or quantities have been
purchased.
Pricing errors. Initial price may be set too
high, leading customers to a lower price
competitor.
Special sales. Regular stock may be marked
down for a special sales event, or a retailer
may buy particular goods to sell at
promotional prices.
Calculate Markdowns
Markdowns are the most common type of
price change.
Markdowns are used as a tool to stimulate
sales, dispose of slow moving/discontinued
merchandise, meet competitors’ prices and
increase customer traffic.
MARKDOWN (MD) = RETAIL PRICE X MD%
$25
=
$100
X 25%
Find Markdown Percentage
Markdowns are expressed as a percentage of net
sales and cannot be calculated until merchandise
is sold.
Markdown percentages are usually calculated for
a specific period of time rather than on individual
items.
MD%= DOLLAR MD / NET SALES
1.8%= $10,000 / $550,000