Question

Anne Cummins is in the process of developing the merchandise budget for the beachwear shop she...

Anne Cummins is in the process of developing the merchandise budget for the beachwear shop she is opening in Maui, Hawaii , next year. She has decided to use the basic stock method of merchandise budgeting. Planned sales for the first half of next year are $240,000, and this is divided as follows: February = 9 percent, March = 10 percent,, April = 15 percent, May = 21 percent, June = 22 percent, and July = 23 percent. Planned total reductions are 9 percent for February and March, 4 percent for April and May, and 12 percent for June and July. The planned initial markup percentage is 48 percent. Alexia desires the rate of inventory turnover for the season to be two times. Also, she wants to begin the second half of the year with $100,000 in inventory at retail prices. Develop a six-month merchandise budget for Anne

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Answer #1

Total reduction in dollar is calculated as

= sales figure × % of total reduction.

Markup is calculated as

total reduction in $ + 48%

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