#1.4 : Markups, Markdowns, and Additional Mark-on Flashcards
Difference between fixed cost and variable cost.
Fixed cost are costs incurred regardless of the volume of production (not output-dependent), and, Variable cost are costs that depends on the volume of production (output-dependent).
Markup amount formula
Selling Price - Variable Cost
Selling Price formula
Cost (both fixed and variable) + Markup
Markup percentage can be based from:
Cost and Selling Price (Margin)
Markup rate based on cost
Markup amount / Variable Cost x 100
Markup rate based on Selling Price
Markup amount / Selling Price x 100
Markup based on Selling Price is called _____.
margin
Whether Cost or Selling Price formula
PBR - where P= Portion, B= Base, and R= rate
To distinguish whether the Cost or SP is the base, the rate should be at what percent?
100%
Other term for markup amount
Peso Markup
It is a deduction from the original selling price due to promotional strategies, trend & seasonal changes, or surplus of products.
Markdown
Markdown amount formula
Original Selling Price – Sale Price
Markdown rate formula
Markdown amount / Original Selling Price x 100
Markdown is always based on ________.
Original Selling Price
What is sales price?
New price of the product after markdown
It is an increase in the price due to shortage of production or caused by an approaching peak season
Additional Mark-on
Additional Mark-on is based on ________.
Existing Selling Price
Additional Markdown amount formula
New Selling Price - Original Selling Price=
New Selling Price formula
Original SP x (1+Mark-on rate)
