RCSC 304 Retail Mathematics

Transcription

1 1 RCSC 304 Retail Mathematics The following are examination questions used to assess students abilities to apply information from RCSC 304 to satisfy the learning outcome of Be able to quantitatively and qualitatively analyze opportunities and risks faced by managers in the retail sector and make related business decisions in the context of academic work (e.g., problem sets, case studies, simulations). The first set of questions, 20 questions from problem sets that are designed to measure students quantitative abilities to analyze opportunities and risks faced by retail managers. The second set of 12 questions are among some of the exam questions that measure students qualitative abilities to analyze retailers opportunities and risks and/or make related business decisions. Quantitative Ability Assessments Problem Set A: Hungry s Eatery plans to sell steak dinners that cost $10.55 to prepare and serve. The restaurant s markup goal for each steak dinner is a 38% markup based on retail. 1. In this situation, the cost complement of the 38% markup based on retail is a. 24% b. 38% c. 62% d. 100% 2. What retail price should Hungry s Eatery charge for each steak dinner in order to earn the 38% markup based on retail? a. $17.02 b. $27.57 c. $27.76 d. $ Given this markup situation, retail as a percentage is a. 62% b. 100% c. 138% d. 162%

2 2 Problem Set B: Pete s Grocery Store is considering lowering its initial markup from 35% to 32% and needs to determine what percentage decrease in average retail prices would result from this action. 1. The retail price of an item that costs $10 under the old 35% markup policy would be a. $13.18 b. $15.38 c. $28.57 d. $ The retail price of an item that costs $10 under the new 32% markup policy would be a. $14.71 b. $16.54 c. $31.25 d. $ What percentage decrease in average retail prices might Pete s Grocery expect if they implemented the new markup policy? a. 4.36% b. 4.42% c. 9.38% d %

3 3 Problem Set C: An office supply store reported earning a maintained markup of 38% during the most recent fiscal year. Answer the following questions regarding the gross margin, operating profit, and initial markup percentages earned by the store if it also incurred the financial performance measures listed below. Operating expenses 28% Markdowns 19% Total Reductions 25% Cash discounts 6% Alterations costs 3% Shortages 3% 1. The gross margin percentage earned by this store was which of the following? a. 35.0% b. 39.0% c. 41.0% d. 47.4% e. 53.4% 2. This office supply store earned which of the operating profit percentages listed below? a. 7.0% b. 13.0% c. 19.4% d. 25.5%. 3. The initial markup percentage earned by the office supply store was a % b % c % d % e. Both b and c

4 4 Problem Set D: Feel Good Vitamin Store plans to sell two brands of multi-vitamin tablets. Brand A, which costs $6.45 per 100-tablet bottle, will sell at a retail price of $8.79 while the Brand B, which costs $5.75 per 100-tablet bottle, will sell at a retail price of $9.19. The store plans to sell 1500 bottles of the vitamins and earn a 32.3% markup goal. [Note: Round dollars amounts to the nearest cent (i.e., $5.25), percentages to two decimals (i.e., 68.28%), and units to whole numbers (i.e., 128)]. 1. Out of the 1500 total units, the number of units needed to sell of Brand A in order to earn the 32.3% markup goal is a. 390 units b. 691units c. 729 units d. 1,383 units 2. The number of units needed to sell of Brand B in order to earn the 32.3% markup goal is a. 1,110 units b. 809 units c. 771 units d. 117 units 3. The respective individual markups earned by each brand are 26.62% ($2.34) for Brand A and 37.30% ($3.54) for Brand B. Instead of selling them in the proportions just established, the company sells 65% of Brand A and 35% of Brand B. Which of the markup scenarios outlined below will be experienced by the store? a. The vitamin store will still earn a markup that is equal to 32.3%. b. The vitamin store will then earn a markup that is greater than 32.3%. c. The vitamin store will then earn a markup that is less than 32.3%. d. The proportions sold won t affect the average markup that will be earned by both brands. e. both a and d

5 5 Problem Set E: A furniture e-tailer plans to sell merchandise costing $408,356 that will carry a 48% initial markup. Stock-on-hand, at the start of the fiscal year, costs the store $50,922 and has been marked to retail for $93,600. Goods-on-order will retail for $208,398 and carry a 51% initial markup. 1. The value of planned sales at retail for the furniture company is a. $785,300 b. $800,698 c. $833,380 d. $850, The cost value of the goods on-order is a. $100,031 b. $102,115 c. $106,283 d. $110, The markup percentage needed for future purchases in order to meet this plan is a % b % c % d %

6 6 Problem Set F: The men s sportswear buyer for a small specialty apparel store is computing the opento-buy for the month of May, a 28-day month on the store s planning calendar. For that month, planned sales, reductions, and EOM stock are as follows: planned sales, $47,992; planned reductions, $14,000; and planned EOM stock, $122,440. Actual sales for May appear to be running ahead of plan in that actual average daily sales have been $2,115 per day during the first 8 days of the month instead of the planned average daily sales of $1,714. Actual results for reductions have also been running ahead of plan and have been an average of $529 per day for the first 8 days of the month instead of the planned $500 per day. Stock on-hand at the start of the May was $98,623 while goods on-order and scheduled for delivery in May total $29, Planned remaining sales for the month of May is a. $16,920 b. $34,280 c. $42,300 d. $47,992 e. $59, Planned remaining reductions for the month of May is a. $4,232 b. $5,290 c. $10,580 d. $14,000 e. $14, Total planned merchandise needed for the remainder of May is a. $143,592 b. $148,880 c. $175,320 d. $178,740 e. $185, Considering the sales and reductions that have already occurred in May, the total available merchandise for the month of May is a. $101,713 b. $107,001 c. $110,209 d. $110,441 e. $128, The retail open-to-buy for the month of May is a. $47,167 b. $65,111 c. $68,229 d. $68,319 e. $94,759

7 7 Qualitative Ability Assessments 1. A product carries a 58% individual markup based on the retail selling price. It is correct to assume that, for this product, a. $0.58 of every retail dollar charged for the product is added to its markup b. $0.42 of every retail dollar charged for the product is subtracted from its markup c. $0.58 of every retail dollar charged for the product is applied toward its markup d. $0.42 of every retail dollar charged for the product is used for its retail e. $0.42 of every retail dollar charged for the product is applied toward its markup 2. The retail portion (i.e., denominator) of the formula used to compute initial markup represents the expected value of the a. cost of sales b. net sales c. planned sales d. initial markup plus reductions e. reductions 3. Financial performance measures including operating profit, alterations costs, cash discounts, and operating expenses are covered by which of the following margins? a. gross margin b. contribution margin c. maintained markup d. operating margin 4. When a retailer makes changes to goods after they are sold to the customer and absorbs the cost of the changes instead of charging the customer for those costs, the action is accounted for as a(n) a. alterations expense b. cash discount c. customer discount d. markdown e. operating expense 5. Which of the following statements most accurately describes the difference between stockturn and capital turn? a. Stockturn provides a measure of net sales per every dollar held in average inventory whereas capital turn provides a measure of net sales for every dollar spent on average inventory. b. Stockturn provides a measure of net profit earned for every dollar of net sales whereas capital turn provides a measure of net sales for every dollar spent on average inventory. c. Stockturn provides a measure of net sales for every dollar held in average inventory whereas capital turn provides a measure of net profit earned for every dollar of net sales. d. Stockturn provides a measure of gross margin for every dollar held in average inventory whereas capital turn provides of measure of net sales for every dollar of gross margin earned.

8 8 6. A stockturn is a measure of a a. company s overall sales productivity b. company s overall profitability c. profitability of the company s inventory d. sales productivity of the company s inventory e. sales productivity of the company s space utilization 7. A shoe department is assessing the performance of some of its suppliers on a variety of performance measures. These results are provided in the following table. Supplier Capital Turn GMROI Sales per Square Foot a. Supplier A 4.6 $2.58 $83.55 b. Supplier B 4.9 $2.45 $72.68 c. Supplier C 3.9 $1.64 $62.18 d. Supplier D 4.1 $2.09 $89.66 If you were asked to evaluate which supplier is generating the most profit with its inventory investment, the performance measure that you would select to make this evaluation would be a. Capital Turn b. GMROI c. Gross Margin% d. Stockturn measures 8. You are an assistant buyer who is planning stocks for a department that sells household cleaning supplies in a mass merchandiser. You are planning BOM stocks for laundry detergents, a product category that has relatively stable sales volumes from month to month, is fast selling, and has an annual stockturn that is around 8. What stock planning method would you use given these product characteristics? a. average inventory adjustment method for planning stock b. basic stock method for planning stock c. percentage variation method for planning stock d. stock-to-sles ratio method for planning stock e. none of the above 9. One difference between planning purchases and planning open-to-buy is that planning purchases a. at cost is calculated using the cost complement of the initial markup percentage whereas open-to-buy at cost is calculated using the cost complement of the gross margin. b. considers reductions in its calculation whereas open-to-buy considers only markdowns. c. is conducted during the first stage of a retailer s merchandise budgeting process whereas finding opento-buy is accomplished during the third stage of the merchandise budgeting process. d. uses only projected estimates for sales, reductions and stocks whereas open-to-buy uses a combination of both projected estimates and actual levels of sales, reductions, and/or stocks. e. none of the above statements represent differences between planned purchases and open-to-buy.

9 9 10. According to lecture, which of the following would be considered a controllable influence affecting potential increases or decreases in planned monthly sales volumes of a retailer? a. changing consumer buying patterns b. competitor actions in the community c. changes in economic conditions d. promotion schedule changes e. political events in the community 11. According to the text, a stock planning method that is used for goods that earn an annual stockturn of 6 or under is known as the a. average inventory adjustment method for planning stock b. basic stock method for planning stock c. month s supply method for planning stock d. percentage variation method for planning stock e. week s supply method for planning stock 12. According to the text, a premise of the basic stock method for planning BOM inventories is that it provides for a. stock levels that are directly related to monthly sales fluctuations. b. a base level of available inventory that is independent from any monthly sales fluctuations. c. inventory levels required to meet sales that are planned weekly. d. inventory levels to meet sales volumes that are relatively stable but for goods that turn very quickly. e. inventory levels that are lower than the average inventory.