Chapter 31 Pricing Math

Chapter 31 – Pricing Math

Objectives 31.1

Net profit is more easily understood if we understand gross profit. Gross profit is the difference between sales revenue and the cost of goods sold. Net profit factors in the cost of goods sold as well as any other expenses related to the sale of a good of service.

Show students the difference between dollar and % markup based on cost or retail.

Terms 31.1

· Gross profit – is the difference between sales revenue and the cost of goods sold.

· Maintained markup – is the difference between an item’s final sale price and its cost.

Objectives 31.2

Show and describe to students the general procedures for figuring discounts and then calculate for them various types of discounts.

Terms 31.2

· Employee discounts – is when businesses encourage workers to buy products they sell or manufacture.

CH 31 – Math Formulas

Basic markup calculations:

· To calculate retail price: C + MU = RP,

· To determine the cost: RP – MU = C,

· To determine the $ markup: RP – C = MU

% Markup calculations:

· To change $ markup to a %: MU($) / RP = MU(%)

· To change decimal to a %: move decimal 2 places to the right

Cost Method of Pricing:

· To determine % markup on cost: C x MU(%) = MU($)

· Add $ markup to cost and get retail price: C + MU($) = RP

Retail Method of Pricing:

· To determine what % of retail price is equal to cost: RP(%) – MU(%) = C(%)

· To calculate $ markup: RP – C = MU($)

· To check work: RP x MU(%) = MU($)

(P) Price, (D) Discount, (NP) Net Price

Basic Discount Calculations:

· To calculate dollar discounts: P x D(%) = D($)

· To get Net Price: P – D($) = NP