A book department has $500,000 in yearly operating expenses and planned yearly sales of $5,000,000.If reductions of $75,000 are anticipated and a profit goal of $200,000 is planned,its required initial markup should be 15.3 percent.

Question

Quizplus · Accepted Answer

To calculate the required initial markup percentage, we first need to determine the total required revenue to meet the operating expenses, reductions, and profit goal. The total required revenue is the sum of operating expenses ($500,000), reductions ($75,000), and profit goal ($200,000), which equals $775,000. This amount needs to be added to the planned sales to find the total revenue needed, which is $5,000,000 + $775,000 = $5,775,000. The initial markup percentage is then calculated based on the difference between this total required revenue and the planned sales, divided by the planned sales. The calculation provided does not correctly follow this process, hence the statement is false.

A Book Department Has $500,000 in Yearly Operating Expenses and Planned