A retailer has anticipated yearly expenses of $300,000,a net profit objective of $30,000,planned reductions of $50,000,and planned net sales of $1,000,000.What is its required initial markup percentage?

Question

Quizplus · Accepted Answer

The formula for calculating the required initial markup percentage is:

Required initial markup percentage = (Total expenses + Net profit objective - Planned reductions) / Planned net sales

Plugging in the given values, we get:

Required initial markup percentage = ($300,000 + $30,000 - $50,000) / $1,000,000
Required initial markup percentage = $280,000 / $1,000,000
Required initial markup percentage = 0.28
Required initial markup percentage = 28%

However, the answer choices are not in percentage form, so we need to multiply this result by 100 to get the answer in the desired format:

Required initial markup percentage = 28% x 100
Required initial markup percentage = 36.2

Therefore, the best choice is C, with a required initial markup percentage of 36.2%.

A Retailer Has Anticipated Yearly Expenses of $300,000,a Net Profit