Case 8-3 Template

INSTRUCTIONS: Read the case in the textbook. As a team, answer the questions in this spreadsheet, then save and submit the
assignment as one Microsoft Excel attachment. Also, submit a 1-paragraph Microsoft Word document explaining any issues
or successes you had in answering these questions.
Refer to and use the following abbreviations for the problems below:
PP = Parma minimum supply purchase
S1 = Supplier 1
S2 = Supplier 2
CDF = Chain Discount Factor
NP = Net Price
NDE = Net Decimal Equivalent
TD = Trade Discount
1. The Artists Palette purchases its inventory from a number of suppliers and each supplier offers different purchasing
discounts. The manager of The Artists Palette, Marty Parma, is currently comparing two offers for purchasing modeling clay
and supplies. The first company offers a chain discount of 20/10/5, and the second company offers a chain discount of
18/12/7 as long as the total purchases are $300 or more. Assuming Parma purchases $300 worth of supplies, a) what is the net
price from supplier 1? And b) From supplier 2? And c) From which supplier would you recommend Parma purchase her
modeling clay and supplies?

Part A and B:
Supplier 1 Net Price: (1-0.20)(1-0.10)(1-0.05)(300) = $205.2
Supplier 2 Net Price: (1-0.18)(1-0.12)(1-0.07)(300) = $201.33
Part C: I would recommend Parma to purchase from Supplier 2, since
his/her trade discount in series results in a cheaper net price.

Now use the marked cells below to fill in the appropriate numbers for the variables to check your answers.
Variables Used
S1
S2
PP=
$300.00
$300.00
1st CDF
0.20
0.18
2nd CDF
0.10
0.12
3rd CDF
0.05
0.07
Excel Formula

NP=

$205.20
$201.33
In the yellow cells, create the Microsoft Excel formulas that will give you the
net prices for the two suppliers. Use cell references in the formulado NOT use
numbers.

2. What is the net decimal equivalent for supplier 1? For supplier 2?

Supplier 1: (1-0.20)(1-0.10)(1-0.05) = 0.684
Supplier 2: (1-0.18)(1-0.12)(1-0.07) = 0.671

Use the marked cells below to fill in the appropriate numbers for the variables to check your answers.
Variables Used
S1
S2
1st CDF
0.20
0.18
2nd CDF
0.10
0.12
3rd CDF
0.05
0.07
Excel Formula

NDE=

0.684
0.671
In the yellow cells, create the Microsoft Excel formulas that will give you the
net decimal equivalent for the two suppliers. Use cell references in the
formulado NOT use numbers.

3. What is the trade discount from supplier 1? From supplier 2?

Trade discount: Original price - net price
Supplier 1: 300 - 205.2 = 94.8
Supplier 2: 300 - 201.33 = 98.67

Use the marked cells below to fill in the appropriate numbers for the variables to check your answers.
Variables Used
S1
S2

PP=
NDE
Excel Formula

TD=

$300.00
0.684

$300.00
0.671088

$94.80
$98.67
In the yellow cells, create the Microsoft Excel formulas that will give you the
trade discount for the two suppliers. Use cell references in the formulado NOT
use numbers.

4. The Artists Palette recognizes that students may purchase supplies at the beginning of the term to cover all of their art
class needs. Because this could represent a fairly substantial outlay, the Artists Palette offers discounts to those students
who pay sooner than required. Assume that if students buy a minimum of $250 of art supplies in one visit, they may put it on
a student account with terms of 2/10, n/30. If a student purchases $250 of supplies on September 16, what amount is due by
September 26? How much would the student save by paying early?
Discount = 0.02
Amount due = (1-0.02)*250 = $245
Amount saved = 250 - 245 = $5

Use the marked cells below to fill in the appropriate numbers for the variables to check your answers.
Variables Used
Original
$250.00
Cost=
Discount=
2.00%
Excel Formula

Due by
9/26=
Amount
saved

$245.00
$5.00
In the yellow cells, create the Microsoft Excel formulas that will give you the
amount due by September 26 and the amount saved by paying early. Use cell
references in the formulado NOT use numbers.

5. Assume that if students buy a minimum of $250 of art supplies in one visit, they may put the charge on a student account
with terms of 2/10 EOM. If a student makes the purchase on September 16, on what day does the 2% discount expire? If the
purchase is made on September 26, on what day does the 2% discount expire? If you were an art student, which method
would you prefer: 2/10, n/30, or 2/10 EOM?
The 2% discount expires on October 10th.
I would prefer 2/10 EOM over 2/10, n/30 since for 2/10 EOM, the money can always be paid after the month with a discount,
while with 2/10 n/30 it must be paid within the month, a specific window, to get a discount.

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Case 9-1 Template

INSTRUCTIONS: Read the case in the textbook. As a team, answer the questions in this spreadsheet, then save and submit th
assignment as one Microsoft Excel attachment. Also, submit a 1-paragraph Microsoft Word document explaining any issu
successes you had in answering these questions.
Refer to and use the following abbreviations for the problems below:
BT = Box of tea
S&H = Shipping and handling
P = Desired profit per box of tea
RFP = Rice-filled pad

1. What is the markup percentage for a box of ginger tea?

Percentage markup = 0.70/2.80 * 100% = 25%

Use the marked cells below to fill in the appropriate numbers for the variables to check your answers.
Variables Used
Cost per BT=
$2.59
S&H=
$0.21
P=
$2.80
Excel Formulas

Ginger Tea %
Markup

25.00%

In the yellow cells, create the Microsoft Excel formula that will give you
tea markup percentage. Use cell references in the formulado NOT use

2. If the rice-filled heating pads sell for $7.00, $10.00, and $15.00 for small, medium, and large, respectively, what is the m
percentage on each one?
Original prices are $5, 8, and 12.
Markup % (for small pads) = ($7 - $5)/($5) *100% = 40%
Markup % (for medium pads) = ($10 - $8)/($8) *100% = 25%
Markup % (for large pads) = ($15 - $12)/($12) *100% = 25%

Use the marked cells below to fill in the appropriate numbers for the variables to check your answers.
Variables Used
Small RFP
$7.00
Selling Price=
Medium RFP
$10.00
Selling Price=

Excel Formulas

Large RFP
Selling Price=
Small RFP Cost=

$15.00

Medium RFP
Cost=
Large RFP Cost=

$8.00

$5.00

$12.00

Small %
Markup=
Medium
%
Markup=

40.00%
25.00%

Large %
Markup=

25.00%

In the yellow cells, create the Microsoft Excel formulas that will give yo
markup percentages for small, medium, and large rice-filled heating pads
references in the formulado NOT use numbers.

3. Karen wants to compare using the cost plus method to the percentage markup method. If she sells 2 small rice pads, 4 m
pads, 2 large rice pads, and 20 boxes of $3.50 tea in a month, how much profit does she accumulate? What markup percen
on cost would she have to use to make the same amount of profit on this months sales?

The cost plus markup method uses a markup that is not determined by cost nor selling price. The percentage markup metho
markup that is based of a percentage of the cost or selling price.
Total profit: $61.50
Markup %: 1.102%

Use the marked cells below to fill in the appropriate numbers for the variables to check your answers.
Amount
Sold
Variables Used

Small RFP
Selling Price=

$7.00

Excel Formulas

Medium RFP
Selling Price=
Large RFP
Selling Price=
BT Selling Price

$9.00

$14.00

$3.50

20

Small RFP Cost=

$5.00

Medium RFP
Cost=

$8.00

Large RFP Cost=

$12.00

BT Cost

$2.80

20

Total Profit
$61.50
Total Cost
$55.80
Markup % 1.10215054
based on cost=
In the yellow cells, create the Microsoft Excel formulas that will give yo
profit, total cost, and required markup percentage based on cost. Use cel
references in the formulado NOT use numbers.

4. What prices should Karen charge (using the markup percentage) to obtain the same amount of profit as she did with the
method? Do not include shipping.
5.00 * 0.40 = 2
5 + 2= 7
Karen's selling price with a 40% markup percentage on the cost will be $7.

Use the marked cells below to fill in the appropriate numbers for the variables to check your answers.
Variables Used

Small RFP Cost=

$5.00

Medium RFP
Cost=
Large RFP Cost=

$8.00
$12.00

BT Cost

$2.80

Excel Formulas

Markup %
based on cost=

40%

Small RFP
Selling Price=
Medium RFP
Selling Price=
Large RFP
Selling Price=
BT Selling Price

$7.00
$11.20
$16.80
$3.92

In the yellow cells, create the Microsoft Excel formulas that will give yo
selling prices based on markup percentage. Use cell references in the form
NOT use numbers.

readsheet, then save and submit the

Word document explaining any issues or

ur answers.

t Excel formula that will give you the ginger

nces in the formulado NOT use numbers.

large, respectively, what is the markup

ur answers.

t Excel formulas that will give you the

m, and large rice-filled heating pads. Use cell
e numbers.

. If she sells 2 small rice pads, 4 medium rice

ccumulate? What markup percentage based

ce. The percentage markup method uses a

ur answers.

t Excel formulas that will give you the total

percentage based on cost. Use cell
e numbers.

mount of profit as she did with the cost plus

ur answers.

t Excel formulas that will give you the

age. Use cell references in the formulado