A retailer plans retail expenses for the following year to be 30 percent of net sales,desires a 6.0 percent (of net sales)profit margin,and assumes total reductions will be 5.0 percent of net sales.What is its required initial markup percentage?

Question

Quizplus · Accepted Answer

To calculate the required initial markup percentage, we need to use the following formula:

Required Initial Markup Percentage = (Expenses + Profit + Reductions) / (100% - Profit)

Expenses = 30% of net sales
Profit = 6% of net sales
Reductions = 5% of net sales

Substituting the values in the formula:

Required Initial Markup Percentage = (30% + 6% + 5%) / (100% - 6%)

Required Initial Markup Percentage = 0.41 or 41%

Therefore, the required initial markup percentage is 41%. The closest option is option C, which is the correct answer.

A Retailer Plans Retail Expenses for the Following Year to Be