FM 224 Lecture Notes - Lecture 2: Gross Margin, Markdown

• School: FIT
• Department: Fashion Business Management
• Course: FM 224
• Professor: Janewerner

Document Summary

Chapter five definitions: average markup: the average of markups working with total cost and total retail. Markups can be averaged on an entire stock of goods, a signal purchase or a group of purchases: the average of markups working with total cost and total retail. Since cash discounts and workroom costs are taken into consideration in computing gross margin, the figure is not the same as maintained markup. Initial markup: the difference between the cost price and the original retail price of merchandise. Initial markup does not reflect markdowns or stock shortages: keystone markup: a markup that doubles the invoiced cost of merchandise. Keystone markup provides a retail price that is twice the amount of the cost price: maintained markup: the difference between net sales and gross cost of merchandise sold. Maintained markup is expressed as a percent of net sales and does not reflect cash discounts or workroom costs.