ASPECTS OF TOTAL QUALITY MANAGEMENT APPLIED IN ...

Annals of the University “Constantin Brâncuşi”of Tg-Jiu, No. 1/2008, Volume 2,
ISSN: 1842-4856
If a retailer buys a desk with $200 and sells it with $300, the $100 covers his expenses and
profit. The addition percentage is 33% (1/3) reported to the selling price, and 50% reported to the
cost.
Here are three more examples that prove the importance of calculating addition in a sales
planning.
E.g.1. A clothes’ shop buys men jeans for $12 and wants to obtain an addition of 30%. What is the
selling price?
Addition percentage = (selling price – merchandise cost)/selling price
0.3 = (selling price - $12)/selling price
Or:
Selling price = merchandise cost/ (1-addition)
Selling price = $12/ (1-0.3) = $17.14
E.g.2.A book shop wants a minimum 40% addition. If a large box of envelopes is sold for $7.99,
which is the maximum price the book shop can pay for buying the box of envelopes?
Addition percentage = (selling price – merchandise cost)/selling price
0.4 = ($7.99-merchandise cost)/ $7.99
Or:
Merchandise cost = selling price * (1-addition)
Merchandise cost = $7.99 * (1-0.4) = 4.794
E.g.3. A sports shop buys bicycles. The unitary price is $105 and its unitary selling price will be
$160. What is the addition?
Addition percentage = (selling price – merchandise cost)/selling price
Addition percentage = ($160.00-$105.00) / $160 = $34.4
The addition percentage can also be determined by inquiring the scheduled operational
expenses, the profit and the net sales.
The scheduled addition will be:
Addition percentage = (scheduled operational expenses + scheduled profit) / scheduled net sales
E.g. A florist estimates the annual operational expenses at $55.000. The annual profit is $50.000,
including salaries. The net sales are $205.000.
Addition percentage = (scheduled operational expenses + scheduled profit) / scheduled net sales.
Addition percentage = ($55.000 + $50.000) / $250.000 = 42%
So, if a flower costs $8.00, the selling price will be:
Selling price = $8.00 * (1-0.42) = $13.79, starting from the premise that this flower is the
only product that the florist sells in order to obtain the desired profit.