Difference between permanent markdown and point-of-sale

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Reference no: EM132280221

1. After more haggling it becomes obvious that the vendor is not going to budge. Because you really like the sweater, you decide to pay the cost of $15.50. You settle on a retail of $33.00. After the item has been on your floor for some time it becomes apparent that your customers do not share your sense of taste on this particular item. Your boss remarks, loud enough for everyone in ear shot to hear, “Better mark that dog down, its not fine wine, its not going to improve with age.” After resisting the urge to tell your boss what he can do with the sweater, you decide to mark it down. You settle on a permanent markdown of 20% off. What will the new retail be?

What is the maintained markup for this sweater?

Later, your boss asks you, “What have you learned based on that sweater buy?” What have you learned?

2. The Vandal Lounge (slogan: “We trashed the place so you wouldn’t have to”) is trying to decide drink prices. After rejecting a shrewd suggestion from the head bartender that they charge more for each succeeding drink on the assumption that the impaired patrons won’t have enough sense to understand the novel pricing scheme, you head to the back with a pot of coffee to decide the price of Vandal beer. You estimate that next year you will have sales of $200,000. You want a next profit of $20,000. In addition, you feel that all expenses (excluding COGS) will total around $100,000. What must your IMU plan be?

On further reflection you decide that you had better allow for some free beers for birthdays, special occasions like engagement parties, and, of course, senior citizen discounts for all grad students over 25. In addition, your bartender is quite sloppy, and you expect him to spill some beer on the floor, patrons, etc. You decide that these free, discounted, and spilled beers will run you around $5,000. Do you need to change your IMU plan? If so, what must your new IMU plan be?

3. What is the difference between a permanent markdown and a point-of-sale (or promotional markdown?

Reference no: EM132280221

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