The jewelry department has an initial markup of 55.6%, with total retail reductions of 15%. There are no alteration costs or cash discounts. What is the maintained markup percentage and the gross margin percentage

Maintained markup percentage = 48.9%

Gross margin percentage = 48.9%

Explanation:

Given:

Initial markup = 55.6%

Total retail reductions = 15%

To find the maintained markup percentage use the formula below:

%MMU = Initial MU% - Retail reductions% (100% - Initial MU%)

Substitute figures:

%MMU = 55.6% - 15% (100% - 55.6%)

= 55.6% - 15% (44.4%)

= 55.6% - 6.66%

= 48.9%

Therefore, the maintained markup percentage = 48.9%

To find the gross margin percentage, use the formula below:

GM% = (Net sales - Total cost of goods) / Net sales

We can also use this formula below to find the maintained markup percentage:

MMU% = (Net sales - Gross cost of goods) / Net sales

But we are told that there are no alteration costs or cash discounts here. Therefore the gross cost is the same as the total cost of goods.

This means that the mantained markup percentage and the gross margin percentage are equal.

GM% = 48.9%