Determine the initial mark up percentage for a childrens dep

Determine the initial mark up percentage for a children\'s department with these figures:

Net Sales $270,000

Expenses $92,500

Profit       5%

Employee discounts $2,100

Shortages   $1,550

Cash discounts $5,500

Markdowns 3%

Alteration Costs 3,500

Solution

Initial Markup % = (Expenses + Alteration costs + Reductions + Profit) ÷ (Net Sales + Reductions)

Reductions = Markdowns + Employee Discounts + Cash Discounts + Shortages

Profit = 5% = 0.05*270,000 = $13,500

Markdown = 3% = .03*270,000 = $8100

Reductions = 8100 + 2100 + 5500 + 1550 = $17,250

Initial Markup %= (92500 + 3500 + 17250 + 13500) / (270,000+17250) = 44.125%