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CHAPTER 9 Markup and Markdown

CHAPTER 9 Markup and Markdown. Learning Outcomes. 9-1. Find the cost, markup or selling price when any two of the three are known. Find the cost, markup, selling price or percent of markup when the percent of markup is based on the cost.

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CHAPTER 9 Markup and Markdown

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  1. CHAPTER 9 Markup and Markdown

  2. Learning Outcomes 9-1 • Find the cost, markup or selling price when any two of the three are known. • Find the cost, markup, selling price or percent of markup when the percent of markup is basedon the cost.

  3. Find the cost, markup, or selling pricewhen any two of the three are known 9-1-1 Section 9-1 Markup Based on Cost Cost + Markup = Selling Price Markup = Selling price – Cost Cost = Selling price – Markup

  4. Examples… Section 9-1 Markup Based on Cost • If an item sells for $20 and has a markup of $12, what is the cost of the item? • $8 • If an item costs $16 and is sold for $20, what is the markup of that item? • $4

  5. Cost, markup selling price or percent of markup when percent of markup is based on cost 9-1-2 Section 9-1 Markup Based on Cost • When the markup is based on cost, the cost is the base in the basic percentage formula: P = R x B A retailer can buy a shirt froma wholesaler at $10.00. The retailer will add $5.00 to the cost. The retailer then sells it for $15.00.

  6. Find the percent of markup based on the cost when the cost and selling price are known Cost $10 Rate of cost 100% P = R x B + Markup $5 + Rate of markup ? = Selling price $15 = Rate of Selling price ? HOW TO: Section 9-1 Markup Based on Cost Change the equation so the rate of markupis equal to markup divided by the cost. M = M%(C)

  7. Find the percent of markup based on the cost when the cost and selling price are known What do you know? Rate of cost always equals 100%; MU and C values What you are looking for? Rate of markup and rate of selling price Solution plan Rate of markup = Markup divided by cost Solution Carry out operation HOW TO: Section 9-1 Markup Based on Cost

  8. Find the percent of markup based on the cost when the cost and selling price are known Conclusion Add rate of MU to C to find rate of SP. Does it make sense? HOW TO: Section 9-1 Markup Based on Cost A shirt that costs $10 and sells for$15 has a markup rate of 50% $5 divided by $10 is equal to .5 or 50% Rate of markup (based on cost) is equal to 50%.

  9. Examples… Section 9-1 Markup Based on Cost • If Duke’s photography pays $9 for a 5x7 photograph. If the photograph is sold for $15, what is the percent of markup based on cost? • 66.67% • Lilly buys tea from England for $4 a box and sells it in the U.S. for $12 a box. Find the percent of markup based on cost. • 200%

  10. Find the selling price when cost and percentof markup based on the cost are known A boutique pays $5 a pair for handmade earrings and sells them at a 50% markup based on cost. Find the selling price of the earrings. Cost $5 Rate of Cost 100% + Mark-up ? Rate of markup + 50% = Selling price ? Rate of SP =150% HOW TO: Section 9-1 Markup Based on Cost

  11. Find the selling price when cost and percentof markup based on the cost are known The rate of the selling price is found by addingthe rate of cost (100%) to the rate of markup. Selling price = Rate of sellingprice (based on cost) x cost Cost $5 Rate of Cost 100% + Mark-up ? Rate of markup + 50% = Selling price ? Rate of SP =150% HOW TO: Section 9-1 Markup Based on Cost A boutique pays $5 a pair for handmade earrings and sells them at a 50% markup based on cost. Find the selling price of the earrings.

  12. What is the selling price for a CD which costs the retailer $8.00 and is marked up 60% based on cost? $12.80 What is the selling price for a set of hairbrushes that costs the salon $12.00 and is marked up 150% based on cost? $30 Examples… Section 9-1 Markup Based on Cost

  13. Find cost when the amountand percent of markup are known A DVD movie is marked up $6.50 which represents a 40% markup based on cost. What is the cost of the DVD? HOW TO: Section 9-1 Markup Based on Cost Cost = Cost = Cost = $16.25

  14. Find the cost of a box of ballpoint pens which has been marked up $4 and has a markup rate of 30%. $13.33 Find the cost of a pair of shoes that has been marked up $25 and has a markup rate of 50%. $50 Examples… Section 9-1 Markup Based on Cost

  15. Find the cost when the selling price and the percent of markup based on cost are known A camera sells for $20. The markuprate is 50% of the cost. Find the costof the camera and the markup. HOW TO: Section 9-1 Markup Based on Cost

  16. Find the cost when the selling price and the percent of markup based on cost are known A camera sells for $20. The markuprate is 50% of the cost. Find the costof the camera and the markup. HOW TO: Section 9-1 Markup Based on Cost Cost = Cost = Cost = $13.33

  17. Find the cost and markup of a bicycle tire which sells for $18 and is marked up 50% of the cost. $12 and $6 Find the cost and markup of a moisturizing cream which sells for $30 and is marked up 150% of the cost. Answer: $12 and $18 Examples… Section 9-1 Markup Based on Cost

  18. EXERCISE SET A Practice 1. Peacock’s Jewelry buys a pair of stylish earrings for $52 and sells them for $129. What is the markup? M = S  C M = $129  $52 M = $77

  19. EXERCISE SET A Practice 2. Old Towne Hardware pays $12.15 for lightbulbs that have a 35,000-hour life. The bulbs sell for $29.99. What is the percent of markup based on cost? Round to the nearest tenth of a percent. M = S  C M = $29.99  $12.15 M = $17.84

  20. EXERCISE SET A Practice 3. A computer table sells for $198.50 and costs $158.70. a. Find the markup. M = S  C = $198.50  $158.70 = $39.80 b. Find the rate of markup based on the cost.

  21. EXERCISE SET A Practice 4. Paradise Solar Lights marked up each box of four-color changing LED solar accent lights $8.25. The 60% markup of $8.25 was based on cost. Find the cost and selling price of each box of lights.

  22. Learning Outcomes 9-2 • Find the cost, markup, selling price or percent of markup when the percent of markup is based on the selling price. • Compare the markup based on cost with the markup based on the selling price.

  23. Cost, markup, selling price, or percent of markupwhen percent of markup is based on selling price. 9-2-1 Section 9-1 Markup Based on Selling Price and Markup Comparisons • In the previous section, the markup based on cost, the rate of cost was always 100%. • In this section, the markup based on sellingprice, the rate of selling price is always 100%.

  24. Find the amount of markup and the percent of markup Find the amount of markup and the percent of markup A calculator costs $5 and sells for $10. Find the rate of markup based on the selling price. MORE HOW TO: Section 9-2 Markup Based on Selling Price and Markup Comparisons The markup amount is the differencebetween the selling price and the cost. Divide the markup by the selling price to get the difference and then multiply it by 100%, to get the rate of markup.

  25. Find the amount of markup and the percent of markup (based on SP) for the following items: A dog collar which costs $4 and sells for $10. $6 and 60% A notebook which costs $1.25 and sells for $2. $.75 and 37.5% Examples… Section 9-2 Markup Based on Selling Price and Markup Comparisons

  26. Selling price when amount of markup and percentof markup based on the selling price are known Subtract the percent of markup from100% to obtain the rate of cost. Divide the markup by the rateof markup based on SP. MORE HOW TO: Section 9-2 Markup Based on Selling Price and Markup Comparisons Find cost & selling price if a handbag is marked up $5 with a 20%markup rate basedon selling price

  27. Selling price when amount of markup and percentof markup based on the selling price are known Subtract the percent of markup from100% to obtain the rate of cost. Divide the markup by the rateof markup based on SP. MORE HOW TO: Section 9-2 Markup Based on Selling Price and Markup Comparisons Find cost & selling price if a handbag is marked up $5 with a 20%markup rate basedon selling price SP = $25; C = $25 – $5 = $20

  28. A cell phone which has been marked up $50 and with a markup rate of 33% based on selling price. $150 A pair of socks which has been marked up $3 and with a markup rate of 60% based on selling price. $5 Examples… Section 9-2 Markup Based on Selling Price and Markup Comparisons Find the selling price with the amount of markup based on selling price for the following items:

  29. Selling price when cost and percent ofmarkup based on selling price are known Subtract the rate of markup from100% to determine the rate of cost. Selling price = HOW TO: Section 9-2 Markup Based on Selling Price and Markup Comparisons

  30. Selling price when cost and percent ofmarkup based on selling price are known Find the selling price and markup for a pair of jeans which costs the retailer $28,and has a markup based on selling price of 30% MORE HOW TO: Section 9-2 Markup Based on Selling Price and Markup Comparisons

  31. Selling price when cost and percent ofmarkup based on selling price are known Find the selling price and markup for a pair of jeans which costs the retailer $28,and has a markup based on selling price of 30% MORE HOW TO: Section 9-2 Markup Based on Selling Price and Markup Comparisons SP = SP = SP = $40; MU = $40 – $28 = $12

  32. Examples… Section 9-2 Markup Based on Selling Price and Markup Comparisons Find the selling price with the amount of markup based on selling price for the following items: Find the selling price and markup (basedon selling price) for the following items: • A handheld calculator that costs the retailer $2 and is marked up 60%. • $5 and $3 • A box of gourmet chocolates that costs $8 a box and is marked up 75%. • $32 and $24

  33. Cost when selling price and percentof markup based on selling price are known HOW TO: Section 9-2 Markup Based on Selling Price and Markup Comparisons Subtract the rate of markup from the rate ofselling price to determine the rate of cost. Cost = Rate of Cost x Selling Price

  34. Cost when selling price and percentof markup based on selling price are known Find the markup and cost of a box of pencils that sells for $3 and is marked up 25% of the selling price First, find the rate of cost: 100% – 25% = 75% HOW TO: Section 9-2 Markup Based on Selling Price and Markup Comparisons C = $3 x 75% or .75 = $2.25 MU = SP – C = $3 – $2.25 = $0.75

  35. Compare the markup based on cost with markup based on selling price Find the markup based on cost and the markup based on selling of a computerthat costs $1,500 and sells for $2,000. 9-2-2 Section 9-2 Markup Based on Selling Price and Markup Comparisons Percentage of markup based on cost is 33.33%. Percentage of markup based on selling price is 25%. What accounts for the difference?

  36. Converting a markup based on sellingprice to a markup based on cost. The markup rate based on cost is equalto the markup rate based on selling pricedivided by 100% minus the markup ratebased on selling price. Markup Section 9-2 Markup Based on Selling Price and Markup Comparisons

  37. Converting a markup based on costto a markup based on selling price. Markup rate based on selling price is equalto the markup rate based on cost divided bythe markup rate based on cost plus 100%. Markup Section 9-2 Markup Based on Selling Price and Markup Comparisons

  38. EXERCISE SET A Practice 1. A hole punch costs $40 and sells for $58.50. a. Find the markup. M = S  C = $58.50  $40 = $18.50 b. Find the rate of markup based on selling price.

  39. EXERCISE SET A Practice 2. A briefcase is marked up $15.30, which is 30% of the selling price. a. Find the selling price of the briefcase. b. Find the cost. C = S  M = $51  $15.30 = $35.70

  40. EXERCISE SET A Practice 3. A desk organizer sells for $35, which includes a markup rate of 60% based on the selling price. a. Find the markup based on selling price. M = M%(S) M = 60%($35) M = 0.6($35) M = $21 b. Find the cost. C = S  M C = $35  $21 C = $14

  41. EXERCISE SET A Practice 4. A reclaimed T-shirt scarf sells for $32.00 and costs $20.00. Find the rate of markup based on cost and based on selling price. Round to the nearest tenth of a percent. M = S  C = $32  $20 = $12

  42. EXERCISE SET A Practice 5. A chest is marked up 63% based on cost. What is the rate of markup based on selling price?

  43. Learning Outcomes 9-3 • Find the amount of markdown, the reduced (new) price, and the percent of markdown. • Find the final selling price for a series of markups & markdowns. • Find the selling price for a desired profit on perishable and seasonal goods.

  44. Find the Amount of Markdown, the Reduced(New) Price, and the Percent of Markdown The markdown is found by subtracting the new price from the original price. 9-3-1 Section 9-3 Markdown, Series of Markdowns, and Perishables The original selling price is always 100%!

  45. Find the Amount of Markdown, the Reduced(New) Price, and the Percent of Markdown The markdown rate is found by dividingthe markdown by the original price and multiplying that figure by 100%. 9-3-1 Section 9-3 Markdown, Series of Markdowns, and Perishables

  46. Find the Final SellingPrice for aSeries of Markups and Markdowns Each new price becomes the base. For markups based on cost, multiply thebase by 1 + the rate of markup. For markdowns, multiply the base by the complement of the rate of markdown. 9-3-2 Section 9-3 Markdown, Series of Markdowns, and Perishables

  47. An Example… Section 9-3 Markdown, Series of Markdowns, and Perishables • Find the final price for an item that cost $18, was marked up by 20% and then was marked down 33%; and was subsequently marked up 10%and finally marked down by 50% for clearance. • Answer: $7.91

  48. Find the Selling Price for a Desired Profit on Perishable and Seasonal Goods Determine the cost by multiplying the unit priceby the quantity. Determine the markup rate and amount andadd to the cost. Establish the expected to sell amount. Divide the total selling price by the expectedto sell amount. 9-3-3 Section 9-3 Markdown, Series of Markdowns, and Perishables

  49. Mr. Green buys 100 lb of tomatoes at $0.15/ lb. and establishes a markup rate of 120% based on cost. What is the total selling price? An Example… Section 9-3 Markdown, Series of Markdowns, and Perishables TSP = C (100 x 0.15 = $15) + MU (C or $15 x 120% = $18); TSP = $15 + $18 = $33 He expects to sell 90%. How many pounds is he expecting to sell? 100 lbs. x 90% or 0.9 = expected to sell = 90 lbs. Divide the TSP by “expected to sell” number. $33 ÷ 90 = SP = $0.37 lb.(rounded)

  50. EXERCISE SET A Practice 1. A portable DVD player was originally priced at $249.99 and was reduced by 20%. a. Find the markdown. M = 0.2($249.99) = $50 b. Find the sale (new) price. Reduced price = $249.99  $50 = $199.99

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