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Review

Review. Return on Investment is a calculation that is used to determine the relative profitability of a product Profit / Investment = Return on Investment Break Even Point is the point at which sales revenue equals the costs and expenses of making and distributing.

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Review

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  1. Review • Return on Investment is a calculation that is used to determine the relative profitability of a product • Profit / Investment = Return on Investment • Break Even Point is the point at which sales revenue equals the costs and expenses of making and distributing. • Price sold at / Cost of making and marking = Break Even

  2. Pricing math

  3. Because Everyone takes to long to take notes. • (P) – Price • (D)% - Discount Percent • (D)$ - Discount Dollars • (NP) – Net Price • (SP) – Sales Price • (C) - Cost • (MM)$ - Maintained Markup Dollar • (MM)% - Maintained Markup Percentage • (MD)$ - Markdown Dollar • (MD)% - Markdown Percentage • (MU)$ - Markup Dollar • (MU)% - Markup Percentage

  4. Profit vs.Markup • Basic Markup Calculations • Cost (C) + Markup (MU) = Retail (RP) • Retail Price (RP) – Markup (MU) = Cost (C) • Retail price (RP) – Cost (C) = Markup (MU)

  5. Percentage Markup • Determine the dollar markup • RP – C = MU$ • Change the dollar markup to the percentage markup, divide it by the retail price. Result will be a decimal • MU$/RP = MU% • Change the decimal to a percentage • .40 = 40%

  6. Markup Equivalent table • On page 487

  7. Calculations for lowing prices • Markdowns – Reduce the quantity of goods in stock, a business will sometimes mark down merchandise by a certain percentage. • Retail Price (RP) x Markdown % = (MD)$ • Retail Price (RP) – Markdown$ = Sales Price (SP)

  8. Calculations for lowing prices • Maintained Markup – Different between an item’s final sale price and its cost. • Retail Price (RP) – Markdown$ = Sales Price (SP) • Maintained Markup • SP – C = Maintained Markup (MM)$ • Determine the maintained markup percentage • (MM) $ Divided by SP = (MM)%

  9. discounts • Discount is a reduction in the price of good and services sold to customers. • Multiply the price by the discount percentage to get the dollar amount of the discount • (P) x (D)% = (D)$ • Subtract the discount from the price to get the net price • (P) – (D)$ = NP

  10. Discounts • Cash Discounts is a discount offered to buyers to encourage them to pay their bills quickly • Determine the dollar discount • (P) x (D)% = (D)$ • Determine the net price • (P) – (D)$ = (NP)

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