Betermine the IMU% needed for this department
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Transcribed Image Text:**Determining the Initial Markup Percentage (IMU%) for the Women's Sportswear Department**
The women's sportswear department has net sales of $175,000 and alteration costs of $2,000. To determine the IMU% needed, consider the following figures:
- **Profit:** 3.8%
- **Shortages:** $1,000
- **Expenses:** $66,000
- **Employee Discounts:** 1.2%
- **Markdowns:** 3.5%
- **Cash Discounts:** $4,375
**Objective:** Calculate the initial markup percentage required for this department.
Expert Solution

Step 1
IMU- Initial Markup is the percentage of markup on the cost of goods sold. That means it is the difference amount between the sale price and its initial cost to purchase or produce it.
IMU% in general= (Actual operating expenses+ Actual profit-Cash discounts)/Actual net Sales*100
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