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UNIT E

SELLING FASHION
5.03 Perform various
mathematical calculations
in retail sales.

Calculate Basic Math


Convert fractions to percents.
Divide the numerator of the
fraction by the denominator.
Example: = 1 2 = .50 = 50%

Calculate Basic Math


(cont.)

Convert percents to decimals.


Move the decimal point two
places to the left.
Example: 60% = .60

Calculate Basic Math


(cont.)

Convert decimals to percents.


Move the decimal point two
places to the right.
Example: .63 = 63%

Steps Necessary to Open


and Close a Cash Drawer
1. Verify the opening change fund to
determine that the amount of
money actually provided for the
cash till at the beginning of the
day is equal to the amount
designated for the given days
activity.
Change fund: Coins and currency
designated for use in opening the
register for a given days activity.
Till: The cash drawer of a cash
register.

1. Verify the change fund (cont.)


Before making any sales for the
day
Count the change fund.
Compare the actual change
fund with the amount
designated for the day.
Follow company procedures to
record the result and to correct
any difference before making
sales.

Steps Necessary to Open


and Close a Cash Drawer
(cont.)

2. Balance the cash drawer.


Complete this process at the end of
the day.
Count the cash (including checks)
actually in the drawer.
Complete a closing balance report.
Opening change fund plus cash
received from sales minus cash paid
out should equal actual cash in the
drawer at the end of the day.
Differences are recorded as cash short
or cash over on the balance report.

Math for Cash Sales


Transactions
1. Determine the total due from
the customer.

Add the retail price for each


item purchased to determine
a subtotal.
Calculate sales tax and add to
subtotal.

Sales tax: A government fee,


usually a percentage of the
total sale, which is added to
the retail price of goods paid
by the final user.

Math for Cash Sales


Transactions (cont.)
1. Determine the total due from
the customer. (cont.)

Formulas

Subtotal of purchase X Sales tax


rate = Total sales tax
Subtotal of purchase + Total
sales tax = Amount due from the
customer

Math for Cash Sales


Transactions (cont.)
2. Announce the amount of the
sale.
3. Announce the amount the
customer submits for
payment (also referred to as
the amount tendered).

Math for Cash Sales


Transactions (cont.)
4. Make change as necessary.

If cash register calculates and


displays the amount of change to
be given to customer, the amount
of purchase and the amount
tendered by the customer are
stated and then change displayed
by the register is counted back to
customer beginning with the
largest denomination.

Math for Cash Sales


Transactions (cont.)
4. Make change as necessary.

If older registers (or no registers at


all) are used, the amount of
purchase is stated, and change is
returned and counted up to the
amount tendered by customer
beginning with the smallest
denomination.
Always place the money received
from the customer on the cash
drawer ledge until the transaction
is completed.

Math for Cash Sales


Transactions (cont.)
4. Make change as necessary.

(cont.)

Count change silently to yourself


as you remove it from the till.
Using the automatic method
(when cash register computes
and displays the amount to be
returned), count change silently
to yourself beginning with the
largest bill and counting up to
the amount of the change to be
returned.

Math for Cash Sales


Transactions (cont.)
4. Make change as necessary.

(cont.)

Using the manual method (when


the cash register used does not
automatically compute and
display the amount to be
returned), count change silently
to yourself beginning with the
smallest coin and counting from
the total amount of the sale up to
the amount tendered by the
customer.

Math for Cash Sales


Transactions (cont.)
4. Make change as necessary.
(cont.)

Count change back to the


customer using the same
method used in counting from
the till.
Place the money from the cash
drawer ledge into the till.

Retail Sales Terms


Cost (Cost of merchandise
sold): The amount a retailer
pays the supplier for an item
for resale.
Reflects wholesale price, vendor
discounts/allowances, and
transportation charges
Represents a major outlay of
money for the retailer

Retail Sales Terms


(cont.)

Employee discount: A set


reduction in retail price given
to employees at the time of a
sales transaction.
Discounts entice employees to
buy the product they sell.
Typical discounts granted to
entry-level employees range
from 10% to 30%.

Retail Sales Terms (cont.)


Extension: The result of
multiplying the number of
units by the cost per unit.
Final selling price: The price
at which merchandise
ultimately sells after all
markups and/or markdowns
are taken.

Retail Sales Terms


(cont.)

Gross profit: Sales revenue


minus cost of merchandise
sold.
Gross sales: Total revenue
from sales before considering
returns, allowances, or
adjustments.

Retail Sales
Terms (cont.)
Initial markup: The difference
between merchandise cost and
the selling price originally
placed on the merchandise.
Keystone markup: A markup
equal to the cost of the
merchandise.
Keystoning: Doubling the cost
of the merchandise to arrive at
the retail price.

Retail Sales
Terms (cont.)
Maintained markup: The difference
between the total cost of the
merchandise and its final selling
price.
Must be high enough to cover expenses
and desired profit if the business is to be
successful

Markdown: A strategy used to


stimulate sales, dispose of slow
moving/discontinued merchandise,
meet competitors prices, and
increase customer traffic.
The most common type of retail price
change

Retail Sales Terms


(cont.)

Markup: An amount added to the cost


of goods to reach a selling price.
Net profit: Gross profit minus total
operating expenses.
Net sales: The revenue generated from
sales minus sales returns and
allowances.
Retail Price: The price the customer
pays for the merchandise.
Sales income: The revenue generated
from sales minus sales returns and
allowances.

Basic Markup
Calculations
When cost and dollar markup are
known
Retail Price (RP) = Cost (C) + Markup (MU)

Example:
Retail Price (RP)=$55.00 (C) + $45.00 (MU)
Retail Price (RP) = $100.00

Basic Markup
Calculations (cont.)
When retail price and markup are
known
Cost (C) = Retail Price (RP) Markup (MU)

Example:
Cost (C) = $100.00 (RP) - $45.00 (MU)
Cost (C) = $55.00

Basic Markup
Calculations (cont.)
When retail price and cost are
known
Markup (MU) = Retail Price (RP) Cost (C)

Example:
Markup (MU) = $100.00 (RP) - $55.00 (C)
Markup (MU) = $45.00

Basic Markup
Calculations (cont.)
Markup percent based on retail
price
Used by most department and fashion
specialty stores
Markup % (MU%) = Markup (MU)
Retail Price (RP)
Example:
Markup % (MU%) = [$200 (RP) - $105 (C)]
$200 (RP)
Markup % (MU%) = $95 (MU) $200 (RP)
Markup % (MU%) = .475 or 47.5%

Basic Markup
Calculations (cont.)
Markup percent based on cost
Used by some small businesses
Markup % (MU%) = Markup (MU)
Cost (C)
Example:
Markup % (MU%) = [$210 (RP) - $120 (C)]
$120 (C)
Markup % (MU%) = $90 (MU) $120 (C)
Markup % (MU%) = .75 or 75%

Reasons for Marking


Down Retail Price

Buying errors
Pricing errors
Special sales
Broken assortments
Reduction of goods
in stock

Calculate Markdown
Markdown (MD) = Retail Price (RP) X
Markdown percentage (MD%)

Example:
Markdown (MD)=$195.00 (RP) X 30%
(MD%)
Markdown (MD) = $58.50

Calculate Markdown (cont.)


The New Retail Price (after a
markdown is taken) = Original
retail price (RP) Markdown (MD)
Example:
New Retail Price (RP) = $195 (RP) $58.50 (MD)
New Retail Price (RP) = $136.50

Markdown Percentage
Usually calculated for a specific period of
time
Expressed as a percentage of net sales,
which cannot be calculated until the
merchandise is sold
Used in planning and forecasting
Markdown % (MD%) = Dollar Markdown
(DMD) Net Sales (NS)
Example:
Markdown % (MD%) = $10,000 (DMD)
$550,000 (NS)
Markdown % = .01818 or 1.8%