Finance Chapter Video Playlist

Applied Math

Section 1

Purchasing & Selling (Business Owner)

Section 2

Saving

(Short and Long Term)

Section 3

Borrowing

(Loans of all types)

Finance Unit

Section 1

UNIT PRICING

Comparison Shopping

• Kleen Bore No. 10 Solvent • 3 1/3 fl oz

• $2.28

• Hoppe’s No. 9 Solvent

• 3 1/3 fl oz

Comparison Shopping

• US Forge Welding

Electrode E6011 1/8-Inch by 14-Inch 5-Pound Box

• 5 lb

• $10.99

Hot Max 23032 1/8-Inch E6011 ARC Welding

Electrodes

Comparison Shopping

•

If the quantities are different, how do you tell

which option is better?

•

Compute the unit price

cost per 1 _______fl ozozftlb

total cost total quantity unit price =

Swiffer WetJet Refill

$5.99

42.2 fluid ounces (1.25 liters) $5.99

42.2 fl oz

$0.14/fl oz

Comparison Shopping

•

If the quantities are different, how do you tell

which option is better?

•

Compute the unit price

cost per 1 _______fl ozozftlb

total cost total quantity unit price =

Sears: Lincoln Electric ED030565 Welding Rod $13.68

37 rods in a package. $13.68

37 rods $0.37/rod

+ $10.24

$0.65/rod

Homework

Compute Unit Price

COLA

12 pack

Six 12-fl. oz. cans for $1.89

Twelve 12-fl. oz. cans for $3.54

Compute a unit price to determine the better deal.

total cost total quantity unit price =

price per can = $1.89

6 cans price per can =

$3.54 12 cans

unit price = $0.315/can unit price = $0.295/can

Comparison Shopping

•

Quality or performance the same?

• Product Life (car batteries – CCA rating, Warranty,

etc)

•

Is one product concentrated (use less)?

• Laundry detergent

• Medicine (Aleve™ versus regular ibuprofen)

$95.00 _$88.00

700 CCA _{600 CCA}

Unit Pricing

•

Which is the better deal?

AERKO Freeze +P OC and

Pepper Stream Spray

4 oz for $12.95

Pepperball PAVA Pepper Spray

85 g for $15.95

$12.95 ÷ 4 oz $3.24 per oz

28.3 g = 1 oz

3 oz

Buyer Beware

•

Consumer Reports Online

, Sept. 2009

• State of Connecticut Department of Consumer

Protection:

– In a Stamford, CT Target™ Store they found that 17 of 50 (34%) product’s shelf tags had incorrect unit prices displayed.

• This was noted after the same store was warned about this problem in July of the same year.

• Consumer Reports noted that an A&P Grocery Store in

New York City displayed different unit prices for the same type of product.

Homework

Finance Chapter

Section 1

Percent Terminology

•

In any problem involving percents, there

are always three components:

On a 20 question blueprint reading test, a student got 17 correct. Their score is 85%.

Base

Computing the Part

•

To compute

Part

:

Decimal Form

Sale:

15% off. How much do you save

on a purchase of $145.95 ?

Part

=

Base

x

Rate

Part

=

$145.95

x

0.15

Part

=

$21.89

Discounts

Qty Desc. Unit Price Extended Price

3 Paper $3.85

6 Calculator 8.49

6 Stapler 4.65

Subtotal

Discount

Shipping

Sales Tax

Grand Total

Shipping Table

$0.00 – 14.99 $6.95

$15.00 – 49.99 $8.95

$50.00 – 99.99 $10.95

$100 and above $14.95

3%

Discounts

Qty Desc. Unit Price Extended Price

3 Paper $3.85

6 Calculator 8.49

6 Stapler 4.65

Subtotal Discount Shipping Sales Tax Grand Total Shipping Table

$0.00 – 14.99 $6.95

$15.00 – 49.99 $8.95

$50.00 – 99.99 $10.95

$100 and above $14.95

3% 5.5% $11.5 5 $50.94 $27.90 $90.39 ($2.71) $10.95 $4.82 $103.45

Qty. x Unit Price3 x $3.85

$90.39 x 0.03

Filling-in Order Blanks

Qty Desc. Unit Price Item Discounts if

Applicable

Extended Price

4 Paper $4.85 N/A

3 Calculator 12.01 5%

4 Stapler 8.19 15%

Subtotal

Discount

Shipping

Sales Tax

Grand Total

Shipping Table

$0.00 – 14.99 $6.95

$15.00 – 49.99 $8.95

$50.00 – 99.99 $10.95

$100 and above $14.95

3%

Filling-in Order Blanks

Qty Desc. Unit Price Item Discounts if

Applicable

Extended Price

2 Tillman TIG Gloves (XL)

$27.75 N/A

4 LINCOLN

ELECTRIC Welding Rod, 7018 MR, 1/8 In, 14 L, 10 lb.

$43.05 5%

2 GENERAL TOOLS Magnetic Welding Link $83.05 10% Subtotal Discount Shipping Sales Tax Grand Total Shipping Table

$0.00 – 14.99 $6.95

$15.00 – 49.99 $8.95

$50.00 – 99.99 $10.95

$100 and above $14.95

3%

Filling-in Order Blanks

Qty Desc. Unit Price Item Discounts if

Applicable

Extended Price

2 Tillman TIG Gloves (XL)

$27.75 N/A

4 LINCOLN

ELECTRIC Welding Rod, 7018 MR, 1/8 In, 14 L, 10 lb.

$43.05 5%

2 GENERAL TOOLS Magnetic Welding Link $83.05 10% Subtotal Discount Shipping Sales Tax Grand Total Shipping Table

$0.00 – 14.99 $6.95

$15.00 – 49.99 $8.95

$50.00 – 99.99 $10.95

$100 and above $14.95

3%

5.5%

2 x 27.75 =

$55.50

Step 1: 4 x $43.05 = $172.20

Step 2: $172.20 x 5% =

$172.20 x .05 = $8.61 discount

Step 3: $172.20 - $8.61 = $163.59

$163.59

Step 1: 2 x $83.05 = $166.10

Step 2: $166.10 x 10% =

$166.10 x .10 = $16.61 discount

Step 3: $166.10 - $16.61 = $149.49

$149.49

$368.58

Order Discount: $368.58 x 3% = $11.06

($11.06)

$14.95

New Subtotal: $368.58 – 11.06

New Subtotal = $357.52

Tax Owed: $357.52 x 5.5% =

Tax Owed = $19.66

$19.66

Filling-in Order Blanks

Qty Desc. Unit Price Item Discounts

if Applicable

Extended Price

4 Paper $4.85 N/A

3 Calculator 12.01 5%

4 Stapler 8.19 15%

Subtotal Discount Shipping Sales Tax Grand Total Shipping Table

$0.00 – 14.99 $6.95

$15.00 – 49.99 $8.95

$50.00 – 99.99 $10.95

$100 and above $14.95

3%

5.5%

4 x $4.85 = $34.23 $27.85 $81.48

81.48 x .03 = $10.95

$4.35

$94.34

3 x $12.01 = $36.03 $36.03 x 0.05 = $1.80 $36.03-$1.80 = $34.23

($81.48-2.44) x 0.055 $19.40

Filling-in Order Blanks

Qty Desc. Unit Price Item Discounts

if Applicable

Extended Price

4 Paper $4.85 N/A

3 Calculator 12.01 5%

4 Stapler 8.19 15%

Subtotal Discount Shipping Sales Tax Grand Total Shipping Table

$0.00 – 14.99 $6.95

$15.00 – 49.99 $8.95

$50.00 – 99.99 $10.95

$100 and above $14.95

3%

5.5%

4 x $4.85 =

$27.85 $81.48

81.48 x .03 = $10.95

$4.35

$94.34

($81.48-2.44) x 0.055 $19.40

($2.44)

3 x $12.01 = $36.03

$36.03 x 5%

$36.03 x .05 = $1.80

$36.03 - $1.80 =

$34.23

$34.23

4 x $8.19 = $32.76

$32.76 x 15%

$32.76 x .15 = $4.91

Filling-in Order Blanks

Qty Desc. Unit Price Item Discounts

if Applicable

Extended Price

4 Paper $4.85 N/A

3 Calculator 12.01 5%

4 Stapler 8.19 15%

Subtotal Discount Shipping Sales Tax Grand Total Shipping Table

$0.00 – 14.99 $6.95

$15.00 – 49.99 $8.95

$50.00 – 99.99 $10.95

$100 and above $14.95

3%

5.5%

4 x $4.85 =

$27.85 $81.48

81.48 x .03 = $10.95

$4.35

$94.34

$19.40

($2.44)

3 x $12.01 = $36.03

$36.03 x 5%

$36.03 x .05 = $1.80

$36.03 - $1.80 =

$34.23

$34.23

4 x $8.19 = $32.76

$32.76 x 15%

$32.76 x .15 = $4.91

$32.76 - $4.91 =

$27.85

Subtotal $81.48 Discount - $2.44

Revised Subtotal $79.04

Tax Owed: $79.04 x 5.5%

Homework

•

Practice Set 2 page 6, #1 & 2

•

Next:

– Brief presentation on percent speed tips.

Homework

Homework

•

Practice Set 2 page 6, #1 & 2

Invoices:

Terms

Define, Understand and

Cash Discounts

•

Cash discounts are offered as a means of

Cash Discounts

Sold To: Metal Fabricators Date: 10-Jun 10100 Fair Oaks Blvd Order No. 796152 Fair Oaks, CA 95628 Shipped by: UPS Terms: 2/10 n/30

Quantity

Order No.

Description Unit Price

Extension Total

1

40-225 amp AC stick

welder, Lincoln $428.99 $428.99 3 Full 5-lb CO2 Alum. $95.00 $285.00 2

YS-50 Standard

Welper MIG Gun Pliers $24.99 $49.98 2

YS-55 Holder For

YS-50 Pliers $8.99

$17.98 Invoice Total $781.95 Shipping/Insurance $36.50

Cash discount notation

2/10, n/30

2/10, net 30

Read as: “two ten net thirty”

2: 2% discount

10: must pay within 10 days of invoice date to earn the discount

n: net amount (original invoice total) 0 10 days 30 days

2% net

30: must pay the net amount within 30 days of the invoice date

Example 1

⚫

Determine the cash discount.

⚫ Invoice Amount: $285

⚫ Terms: 3/15, n/30

⚫ Payment will be made soon enough to take advantage of cash discount.

Discount = $285 x 3%

Discount = $285 x .03

Discount = $8.55

3/15 means that you can get a ____discount if you pay within ____ days

Example 2

⚫

Determine the cash discount.

⚫ Invoice Amount: $485 (includes $15 in shipping)

⚫ Terms: 2/10, n/30

⚫ Payment will be made to take advantage of cash discount.

Discount = $470 x 2%

Discount = $470 x .02

Discount = $9.40

Remove shipping: _{$485 - $15 = $470}

2/10 means that you can get a ____discount if you pay within ____ days

Cash Discounts

Home Accessories Wholesalers

Sold To: Kitchens Galore Date: 10-Jun 10100 Fair Oaks Blvd Order No. 796152 Fair Oaks, CA 95628 Shipped by: UPS Terms: 2/10 n/30

Quantity

Order No.

Description Unit Price

Extension Total

6 doz. pastry brush $37.80 doz 3 gro. napkins, cotton $12.60 gro 9 doz. cherry pitters $14.04 doz 8 food processors (3 qt.) $106.12 ea 53 pr. stainless tongs $68.12 pr

Invoice Total

Shipping/Insurance

Cash Discounts

•

Most cash discounts are done using the

Ordinary Dating Method

.

2/10, n/30

2/10, net 30

Read as: “two ten net thirty”

2: 2% discount

10: 10 days to make payment if you want the discount

n: net amount is due

30: the 30th day after receiving the invoice is the “deadline”. Payment after the 30th day is subject to additional penalties.

0 10 30

2% net past due: net + penalty

Invoice

Date: 5/15/2010 2/10 n/30

Total: $361.05

Cash Discounts

GT Distributors

Invoice for:

Rapid Auto Repair

Terms: 1.5/10 n/30

Item Total: $459.85

Shipping $24.95

Grand Total $484.80 Terms: 1.5/10 n/30

Terms: 1.5/10 n/30

1.5% discount…

…if paid w/in 10 days.

no discount (net)…

…if paid between the 11th and 30th day.

Discount = $459.85 x .015 Discount = $6.90

GT Distributors

Invoice for:

Ken’s Ag Repair

Terms: 1.5/10 n/30

Grand Total $783.99

(Includes shipping of

$45.99)

Cash Discounts

Terms: 1.5/10 net/30

Discount = ($783.99 – 45.99) x .015 Discount = $11.07

Homework

Computing Markup

•

Practice Set 4, page 12

Item Cost

+

Markup

=

Retail Price

100% 40% 140%

Item Cost: $57.80 Markup Rate: 40%

Retail Price = _______

$57.80 x 0.40 =

$23.12 markup

$57.80 + 23.12 =

$80.92

SECTION 1

Computing Markup

•

Establish the retail price of an item.

Item Cost

+

Markup

=

Retail Price

$39.19

+

$9.80

_$48.99

Mag-Level

50 lb. pull

Cost: $39.19

Apply a 25% markup to this item.

Markup = Cost x Markup Rate Markup = $39.19 x 25%

Markup = $39.19 x 0.25

Computing Markup

•

Establish the retail price of an item.

Item Cost

+

Markup

=

Retail Price

$373.03

+

$55.95

_$428.98

Lincoln AC-225 Cost: $373.03

Apply a 15% markup to this item.

Markup = Cost x Markup Rate Markup = $373.03 x 15%

Markup = $373.03 x 0.15

Computing Markup

•

Determine the selling price of this item.

Item Cost

+

Markup

=

Retail Price

Item Cost: $350.00 Markup Rate: 28%

Retail Price = _______ $350.00 x 0.28 =

$98.00 markup

$60.25 - $32.50

Markup Rate

•

A club costs a pro shop $32.50.

•

The selling price of the club is $60.25.

•

Compute the

markup rate

(%) applied to this item.

Markup Rate =

Markup Amount

Cost of item

Markup Rate =

$32.50 $27.75

= 0.8538

Markup Rate =

85.4%

Rate

•

Shortcut to compute rate (%)

Rate

=

Part

Base

On a 32 question driver’s license exam, a test-taker got 29 correct.

What is their score as a percent?

Rate

=

29

32

Rate

= 0.90625

Rate

= 91%

$7400 - $5600

Markup Rate

•

Trade-in your Car for $5,600

•

Dealer puts a price of $7,400 on the car.

•

Compute the

markup rate

(%) applied to the car.

Markup Rate =

Markup Amount

Cost of item

Markup Rate =

$5600 $1800

= 0.32142

Markup Rate =

32.1%

R =

P

$224.97 - $168.00

Markup Rate

•

DeWalt

Heavy Duty Circular Saw

•

Dealer Cost: $168.00 Retail Price: $224.97

•

Compute the

markup rate

(%) applied to the saw.

Markup Rate =

Markup Amount

Cost of item

Markup Rate =

$168.00 $56.97

= 0.339107

Practice