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8/13/2019 Notes - Chapter 5 Jan 14 Key
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MATH 149 CHAPTER 5 JAN 14, 2013
MATHXL: Homework CH 5due Jan 21 HAND-IN ASSIGNMENT due Jan 21
__________________________________________________________________________________________________
5.2 PAYMENT TERMS
Within the supply chain, payment terms often include cash discount(s) and credit period:
% cash discount if payment is made within specified #of days Full payment before DUE DATE
EX 1:
Bay Street Vending received an invoice dated August 4 with the terms 2/10,n/30. The amount stated on the
invoice was $2436.00.
a) What is the last day for taking the cash discountb) What is the amount due if the invoice is paid on i) August 10, ii) August 31
EX 2:
An invoice for $7500 dated April 15, with terms: , is paid in full on May 5. What is the
total amount paid to settle the account?
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A business may choose to make a partial payment on an invoice, and the payment terms will still apply to
such a partial payment.
EX 3:
The amount of an invoice is $2522.64, with the payment terms 3/15, n/60. What payment during the discount
period will reduce the amount due on an the invoice
a) by $1021.04b) to $1021.04
EX 4:
What amount must be paid if the following invoice, all with terms 5/10, 2/30, n/60 are paid together on
Dec 15?
Invoice No 512 dated Nov 13 for $864
Invoice No 520 dated Nov 30 for $987
Invoice No 615 dated Dec 5 for $1025
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5.3 MARKUP
Selling price:
cost of purchasing goods operating expenses (overheads) profit
MARKUP = EXPENSES + PROFIT
(MARKUP, also known as GROSS PROFIT)
Markup may be given :
As percent of cost:
As percent of selling price:
EX 5:
Carmelos buys supplies to make pizzas at a cost of $4.49. Operating expenses of the business are
139% of the cost and the profit he makes is 157% of cost. What is the regular selling price of each
pizza?
SELLING PRICE = COST + EXPENSES + PROFIT
S = C + E + P
SELLING PRICE = COST + MARKUP
S = C + M
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EX 6:
On Oct 29, a sports store purchased 200 tennis racquets priced at $72.79 less 44% for purchasing more than 100
items, and a further 20% was reduced for purchasing the racquets in October. The racquets were sold to
customers for %50.68.
a) What is the cost of each racquet?b) What is the markup as a percent of cost?c) What is the markup as a percent of selling price?
EX 7:
Using a markup of 35% of cost, a store priced a book at $8.91.
a)
What was the cost of the book?b) What is the markup as a percent of selling price?
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EX 8:
Leather Factory bought 100 bags for $85 each and sold 60 bags for the regular swelling price of $145 each. The
remaining bags were sold during a clearance sale for $105. Overhead is 45% of regular selling price.
Determine;
a) the markup, the overhead expense, and profit per bag sold at the regular price;b) the markup, the overhead expense, and profit per bag sold during the clearance sale;c) the total profit / loss realized.
5.4 MARKDOWN
Note:
Even though the SALE PRICEmight still be higher than the cost, due to the overheads (Expense), thecompany may operate at a loss.
Therefor the sale price must cover the total cost, (C + E) for the company to break even(profit = 0 ortotal cost = sale price)
TOTAL COST = COST (of buying) + EXPENSES
Regular Selling Price Markdown(discount) = Sale Price
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EX 9:
Par Putters Company sells golf balls for $32 per dozen. The stores overhead expenses are 29% of the cost and
the owners require a profit of 20% of cost.
a) For how much does Par Putters Company buy one dozen golf balls?b) What is the price needed to cover all the costs and expenses?c) What is the highest rate of markdown at which the store will still break even?d) What is the highest rate of discount that can be advertised without incurring an absolute loss?
EX 10:
A jewellery store paid a unit price of $115 for a shipment of designer watches. The stores overhead is 35% of
selling price and the normal profit is 25% of selling price. During an inventory sale, the watches were marked
down 40%.
a) What is the regular selling price of the watches?b) What was the sale price?c) What was the operating profit or loss?d) What must the sale price be for the store to break even?e) What is the rate of markdown to sell the watches at break-even price?
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5.5 INTEGRATED PROBLEMS
Ex 11:
A ski jacket that cost a dealer $523.00 less 60%, 11% is marked up 172% of cost. The dealer overhead expenses
are 355 of the regular selling price. To clear the inventory, the jacket was reduced by 59%.
a) What is the regular selling price?b) What is the sale price?c) At the sale price, what profit or loss was realized?
EX 12:
A hardware store paid 33.45 for a set of cookware. Overhead expenses is 15% of the regular selling price and
profit is 10% of regular selling price. During a clearance sale, the set was sold at a markdown of 15%. What
was the operating profit or loss on the sale?
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EX 13:
The Outdoor Shop buys tents for $264 less 25% for buying more than 20 tents. The store operates on a markup
of
of the sale price and advertises that all merchandise is sold at a discount of 20% of the regular selling
price. What is the regular selling price of the tents?
EX 14:
A merchant realizes a markup of $42 by selling an item at a markup of 37.5% of cost. The merchant s overhead
expenses are 17.5% of regular selling price. At a promotional sale, the item was reduced to $121.66.
a) What is the regular selling price?b) What tis the rate of markup based on the regular selling price?c) What is the rate of markdown?d) What is the profit or loss during the promotional sale?
Additional Practise: EX 5.1 5.5 (odds)