An item sells for ​$80 and is reduced to sell for ​$50 . Find the markdown amount and the rate of markdown.

Question

An item sells for

​$80

and is reduced to sell for

​$50

.

Find the markdown amount and the rate of markdown.

Answer 1

The markdown in the above example is $30 (Retail $80 – Reduced to sell $50). The rate of the markdown is: Markdown $30/ Original Retail $80 = 37.5% as a markdown percentage.

An algebraic proof would be 1 - .375% = 62.5% translated as 100% retail less 37.5% markdown equals 62.5% adjusted retail. To arrive at adjusted retail in dollars, take $80 x .625% = $50 for original retail x adjusted retail % equals marked down retail.

It is academically interesting to remember net markdowns are ignored in calculating the ending inventory at retail and at cost. Once you have calculated the ending physical inventory at retail, multiple it by the Cost/Ratio determined for Total Goods Available for Sale to arrive at ending inventory at “cost”.