Question

Vera Wang white skirts were marked down from $189 to $49.

a. What percentage markdown was taken?

b. Discuss briefly why such a drastic markdown might need to be taken.

c. If 35 units were available at the original price and 20 units sold at that price (i.e. original price of $189) and 10 were sold at the markdown price of $49, what is the markdown cancellation if the remaining skirts were marked back up to the original price of $189?

Answer 1

(a).

Original price = $189

Markdown price = $49

Thus mardown ($189 – $49) = $140

Percentage markdown ($140 * 100 / $189) = 74.04%

(b).

Drastic markdown might need to be taken due to following reasons;

1. For improving overall sales.

2. For beating competition in the market.

3. For meeting the demands of the customers in the market.

4. It can be due to fall in the income level of the customers.

5. For preventing fall in the quantum of the sales etc.

(C).

Total units avilable for sale = 35 units

Total units sold (20 units + 10 units) = 30 units

Original price = $189

Markdown price = $49

As per information of the question, it is clear that 5 units will be sold at $189. Hence markdown cancellation per unit ($189 – $49) = $140

So total markdown cancellation (5 Units * $140) = $700