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York University

Administrative Studies

ADMS 2200

Richard Patterson

Winter

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The Price is RightHere we are giving you some guidelines and sample questions to explore as you refine your grasp of the essential marketing arithmetic that every marketer needsFirst lets check out some concepts Retail GrossMarkupRetail Margin On Cost Price Cost of Cost ofGoods Sold Goods SoldGross MarginRetail PriceCost X 100 MarkupRetail PriceCost X 100Retail PriceCostMake sure you are absolutely clear on this fundamental relationship It shows how the final retail selling price of an item has two components One is the amount the retailer paid for the item Cost of Goods Sold or COGS The other is the money the retailer gets to keep which is the retail gross margin or the markup on cost This money will go first towards fixed costs then to profit This means that we can express retail price as 100 and the COGS and Gross Margin must add up to 100 eg 6733100 All of the following calculations rely on these simple facts1 Working with Costs and Margins If you are given the cost of the product and the margin as a age the following is trueCostmargin x Retail PriceRetail Price Suppose the cost is 15 and the margin is 25 Put another way1525 x Retail PriceRetail Price Since an equation is equal on both sides we can do the same thing to each side without affecting this equality In this case we want all the retail price information on one side so we subtract 25 x Retail Price from each side15Retail Price25 x Retail Price75 Retail PriceWe want 100 of the Retail Price so we need to multiply both sides by 10075100X 15100 Retail Price2075 MarkIIUnit6Nowell050609

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