profits.   To   account   for   any   gains   or   losses resulting   from   the   handling   of   Navy   clothing items, you should credit or charge the Navy Stock Fund. You  may  have  items  of  clothing  that  have become  shopworn  (soiled  from  exposure  or handling)   or   damaged   by   smoke   or   water to such an extent that they cannot be sold at the standard price. If laundering or dry cleaning will restore wearability with a reasonable expectation that the purchaser will obtain normal wear, you should survey (revalue) these items and place them in stock at 25 percent of the standard price. (Prices should  be  rounded  off  the  next  higher  $0.05.  ) You  may  have  items  of  clothing  with  minor defects  such  as  split  seams  or  missing  buttons. Although you cannot sell them at standard price in  this  condition,  you  can  have  them  repaired. You can then sell the items at standard price as long as wearability is restored. You should charge the  cost  of  the  repairs  to  the  Navy  Stock  Fund. If  the  clothing  does  not  meet  any  conditions for revaluation or repair, then you should expend it  from  the  records  as  a  loss  by  survey. Sales The  fourth  major  type  of  expenditure  in  the ship’s store is sales. Accountability is actually not reduced  in  this  case  since  cash  is  received  in  place of  the  stock  expended.  The  supervision  of  ship’s store sales will be discussed in chapter 6 of this rate training   manual.   The   information   below   will discuss some of the techniques of retail merchan- dising  you  can  use  to  expend  ship’s  store  stock, Price  Changes A price change is any change in the value of an  item  of  stocked  merchandise.  Price  changes  can occur for a variety of reasons and are a necessity for  any  effective  retail  operation.  As  a  leading Ship’s  Serviceman,  you  should  not  only  be  able to   supervise   the   procedures   involved   in   ac- complishing a price change, but you must also be aware  of  the  reasons  for  and  causes  of  price changes. You should be able to advise the ship’s store  officer  when  a  price  change  is  called  for. A markon is an increase in the selling price of an item of merchandise. A markon will cause an increase in the monetary responsibility of the custodian in charge of the retail outlet. You may advise  a  markon  when  there  is  a  substantially increased  cost  price  on  a  new  receipt  of  mer- chandise already carried. Since all the particular items  are  carried  at  the  new  cost  price,  the  old selling price may be insufficient to generate the desired profit margin. Other possible reasons for a markon might be a change in the pricing policy of the ship’s store officer or a desire on the part of   the   commanding   officer   to   increase   store profits  in  order  to  increase  the  ship’s  recreation fund. A  markdown is a decrease   in  the  selling price.   A   markdown   causes   a   decrease   in   the monetary  responsibility  of  the  ship’s  store operator. 1 f the retail price is marked down below the cost price, then there is actually a decrease in the  value  of  Navy  Stock  Fund  material.  This expenditure  from  the  NSF  is  reimbursed  by profits  at  the  end  of  the  accounting  period. The  existence  of  markdowns  in  an  operation is  not  necessarily  bad.  In  fact,  a  reasonable number  of  markdowns  during  an  accounting period  is  considered  healthy.  It  is  an  indication that you are exercising some degree of stock con- trol.  After  all,  items  that  you  cannot  sell  are  no asset to your store. They are tying up money you could  use  to  purchase  more  desirable  stock. Although an item that is reduced in price generates less  profit  or  even  a  loss  per  item  sold,  the  end result  of  a  timely  markdown  is  an  increase  in profits.  The  increase  in  profits  will  result  from larger  customer  volume  and  interest,  increased storeroom   capacity,   and   a   larger   amount   of available  buying  capital.  Of  course,  markdowns must  be  done  selectively  since  too  many markdowns  can  only  result  in  decreased  profits for  your  store. The following is a list of reasons for possible markdown  action  in  a  ship’s  store  operation. Reduction  in  cost  price  on  a  new  receipt of  merchandise  already  in  stock     A desire to generate less in store profits and pass the savings on A  change  in store   officer Excess  stock Dead   stock saturated items Merchandise to  the  customers pricing  policy  of  the  ship’s because  of  overbuying because   of   unpopular   or that  is  going  out  of  style Excess   seasonal   merchandise   after   the season has reached its peak Perishable stock such as candy or film that has  become  old  and  outdated 5-12