The difference between initial markups and maintained markups is due to ________

Question

The difference between initial markups and maintained markups is due to ________. A.different terms offered to larger customers B.seasonal discounts C.markdowns, added markups, shortages, and discounts D.revisions in planned profits A.different terms offered to larger customers B.seasonal discounts C.markdowns, added markups, shortages, and discounts D.revisions in planned profits A.different terms offered to larger customers B.seasonal discounts C.markdowns, added markups, shortages, and discounts D.revisions in planned profits

Explanation / Answer

c) Initial markups need to be higher than maintained markups if a retailer is to meet revenue and profit goals. Thus, an initial markup for an item must reflect the fact that during a selling season there will be shrinkage, breakage, employee discounts, and end-of-season markdowns. A maintained markup represents the weighted average markup for an item, which is computed as: (total actual revenues received - the cost of goods sold)/total actual revenues received. A retailer will make a serious mistake if beginning-of-season prices represent the average prices sought for the entire selling season.

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