PowerPoint PresentationAfter completing this chapter, you will be able to:
… the net price of an item after single or multiple trade discounts
… a single discount rate that is equivalent to a series of multiple discounts
… the amount of the cash discount for which a payment qualifies
Calculate
Learning Objectives
LO 2.
LO 1.
LO 3.
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…the ordinary dating notation for the terms of payment of an invoice
Understand
Solve
Middlemen
Manufacturer
Wholesaler
Consumer
Retailer
Distributor
Middlemen
i.e.
Formula
Formula
LO 1.
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Trade Discount
The price of office equipment is $3000. The manufacturer offers a 30% trade discount. Find the net price and the trade discount amount.
= 3000(1 – .3)
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Trade Discount
An order for power tools has a $2100 net price after a 30% trade discount. What is the list price?
L =
This
does not mean a TOTAL of 30% Discount!
This refers to the giving of further discounts as incentives for more sales.
Middlemen
Distributor
Note
Wholesaler
LO 2.
Series Discounts
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The price of office furniture is $20000. The series discounts are 20%,10%, 5%. What is the net price?
L
= 20000(1-.2)(1-.10)(1-.05)
= 20000(.8)(.9)(.95)
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Find the single discount rate that is equivalent to the series 15%, 10% and 5%.
Apply the multiple discounts to a List price of $100
N = L(1 – d)
27.33%
Step 1
Step 2
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The price of car parts is $20,000. The series discounts are 20%, 8%, 2%. What is the single equivalent discount rate?
= 100(.8)(.92)(.98)
= $72.13
discount =
Apply the multiple discounts to a List price of $100
Trade Discount
Step 1
Step 2
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A discount given for the prompt payment of an account.
No Cash Discount
Period for buyers to pay invoices
Terms
IF Not …then full amount payable in 30 days
Therefore, discount can be claimed!
Terms
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Partial Payments
You owe $400. Your terms were 3/10, n/30. Within 10 days you sent in a payment of $100. How much is your new balance?
Amount credited L = Amount paid /(1-d)
- or -
Selling Price
Consumer
Gross Profit X (or Margin/MarkUp)
Less: Operating Expenses X
Net Profit (Income) $ X
Operating Expenses are the expenses the company incurs in operating the business, e.g. rent, wages and utilities
The X Co. Inc
$1200
Computer
$900
$300
+
$ MarkUp is
The Portion
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You buy Sunday newspapers for $1.00. You plan to sell them for $1.50. (A) What is your $ markup? (B) …and your percent markup on cost?
(A) Selling Price $1.50
you know Cost & Percent Mark Up on Cost
Mark
Up
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$
?
Mark
Up
?
Jane’s flower business sells floral arrangements for $35. To make her desired profit, Jane needs a 40% markup on cost.
(A) What do the flower arrangements cost Jane?
(B) What is the dollar markup?
(A)
Mark
Up
Selling Price
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You buy Sunday newspapers for $2.00. You plan to sell them for $2.50.
(A) What is your $ markup?
(B) …and your percent markup on Selling Price?
(A) Selling Price
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Ray’s Appliances bought a sewing machine for $150. To make the desired profit, a 60% markup on Selling Price is needed. (A) What is the Selling price? (B) What is the $ markup?
(A)
?
Jane’s flower business sells floral arrangements for $35. To make her desired profit, Jane needs a 40% markup on Selling Price.
(A) What do the flower arrangements cost Jane?
(B) What is the dollar markup?
(A)
% Markup on Cost
% Markup on Cost
.33
Selling Price (original)
Sears marked down a $50 tool set to $36. What is (a) the $markdown and (b) the %markdown?
$Markdown =
%Markdown =
Markdown
*S(R)
?
?