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what is the cons of markdown/and markup
The cost-plus markup method is simple to calculate and uses data that has already been accumulated. Information that is currently recorded in the company's accounting records is gathered to use as a starting point. [ [ Cost accounting combines the direct materials, direct labor and factory overhead costs to determine a total cost for the product. Management also needs to commit to using either a markup percentage or a flat dollar amount. If a markup percentage is used, the unit cost is multiplied by the percentage to determine the amount of the markup. If a flat dollar amount is used, this
is the amount of the markup. The amount of the markup is added to the product cost to determine the selling price. DISADVANTAGES OF MARKDOWN: 1) Selling price is high when buyers are willing to pay the cost, and markup can be added when the company needs to make more profit. 2) A markdown can be given, where you are short on cash, and you normally buy the top rate item, instead to take the cheaper product to keep a balanced budget. 3) Advantages: allows you to get a good at cheaper price, you can buy more Disadvantages: there is probably a reason it is getting marked down, and the company selling the product will not make as much as expected. ]
Expert answered|mxs|Points 500|
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Asked 9/1/2012 2:06:56 PM
Updated 236 days ago|6/9/2022 1:44:58 AM
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Essentially, it commits your business to constantly advertise sales and price reductions, or customers will look for competitors who do so. Studies have shown that customers, familiar with the markup-markdown strategy, effectively "discount the discounts," by assuming the real savings are less than advertised.
Added 236 days ago|6/9/2022 1:44:58 AM
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