In doing a refund for an item that was purchased as part of our buy 2 get a 3rd item free program, the return value must be adjusted to allow for the value of the "free" item(s) included in the order.
The refund value is based on the items percentage contribution to the over all order value.
We calculate the cash refund value on a single item in the following way:
Item Retail Value divided by Order Retail Value before discount = Item Value Percentage
Order cost times Item Value Percentage = Cash Value
A $100 flag and a $50 flag are purchased. One additional $25 flag is selected at the time of purchase as the "free" flag under our promotion. Later the customer wishes to return the $100 flag for a refund.
The Retail Order value = $175
The Returned Items % of the Retail order Value - 57%
The Orders Item Cost was $150.
57% of $150 = $85.50
The Cash Value of the Returned $100 item is adjusted to be $85.50 to account for the "free" item's value in the order.