Question

A buyer for men’s ties has an opening inventory of $15,000 (retail), which carries a 52.5% markup.  For the upcoming season, new ties costing $2,100 were added to the inventory.  They were marked to sell for $4,200 at retail. Find the cumulative markup percent on merchandise handled in this department.

Answer 1

Solution:

Opening inventory at retail = $15,000

Markup % in opening inventory = 52.5%

Markup in opening inventory = $15,000* 52.5% = $7,875

Cost of purchases of new ties = $2,100

Retail price for new ties = $4,200

Markup in new ties = $4,200 - $2,100 = $2,100

Cumulative markup = $7,875 + $2,100 = $9,975

Cumulative retail price = $15,000 + $4,200 = $19,200

Cumulative markup percent on merchandise handled in this department = Cumulative markup / Cumulative retail price = $9,975 / $19,200 =51.95%