Contemporary Business Math for Colleges Speech or Presentation

Contemporary Business Math for Colleges - Speech or Presentation Example The percentage increase in a variable is computed by establishing the difference between an initial amount, the base and the final amount. The difference is divided by the initial amount. Then the fraction is converted to a percentage by multiplication of the fraction by 100. % Increase/Decrease = Difference between Two Figures à · Previous Figure   Discounts, interest, commission, and markups and markdowns A discount is a reduction made in the cost of a product in order to promote sales. Discounts also enable customers to save because of less expenditure. The discount is calculated based on the original cost of an item. The commission is the return received by a salesperson after completion of a business transaction. The commission is also computed as a percentage of sales made. Interest is the fee, which is paid by a borrower of assets. The interest acts as a compensation for the owner of an asset. It is the value of borrowed money. Additionally, an interest is also obtained through the deposit of money with financial institutions. Markup is the difference between the retail product cost and the revenue obtained from a product customer. The ratio can be compared to the gross margin in a financial statement analysis scenario. The markup margin represents the extra cost a retailer charges a customer in order to earn the profit. Conversely, the markdowns are the reduction of the initial selling price in order to leverage on sales. According to Southam (2013), a retailer marks down a product because of stock accumulation. Additionally, products are marked down because of the perishability of a product. Traders also markdown products in the course of offering discounts to their customers. Promotions also call for product markdown in order for potential customers to purchase the products. The markup helps in equalizing of marginal profits to marginal costs. Computation of depreciation Depreciation is the reduction of the value of an asset over time. There are many methods used in the calculation of depreciation. The commonly used methods are a Straight-line method, double declining balance and the sum of year digits. The straight-line method of depreciation calculation spreads depreciation equally over the entire period of an asset. However, the salvage value of an asset must be ascertained prior to the computation of depreciation.