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 a
as one Microsoft ExcelExcel attachment. Also, submit a 1-paragraph Microsoft Word document explaining any issues or succe
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 purchasi
discounts. The manager of The Artists Palette, Marty Parma, is currently comparing two offers for purchasing mode
and supplies. The first company offers a chain discount of 20/10/5, and the second company offers a chain discount o
as long as the total purchases are $300 or more. Assuming Parma purchases $300 worth of supplies, a) what is the n
from supplier 1? And b) From supplier 2? And c) From which supplier would you recommend Parma purchase her mod
and supplies?

(Use this cell to answer parts a, b, and c. Be sure to show your work.)
Part A
Supplier 1
$300(0.20) = $60
$300 - $60 = $240
$240(0.10) = $24
$240 - $24 = $216
$216(0.05) = $10.80
Net Price = $216 - $10.80 = $205.20
OR A more direct formula: Net Price = $300(0.8)(0.9)(0.95) = $205.20
Part B
Supplier 2
$300(0.18) = $54
$300 - $54 = $246
$246(0.12) = $29.52
$246 - $29.52 = $216.48
$216.48(0.07) = $15.15
$216.48 - $15.15 = $201.33
OR A more direct formula: Net Price= $300(0.82)(0.88)(0.93) = $201.33
Part C
Parma would save $3.87 with supplier 2. The difference in the net price of the two suppliers; $205.20 - $201.33 = $3.87

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

Excel Formula

S1

S2

PP=

$300.00

$300.00

1st CDF

0.80

0.82

2nd CDF

0.90

0.88

3rd CDF

0.95

0.93

NP=

$205.20

$201.33

In the yellow cells, create the Microsoft Excel formulas that will give y
prices for the two suppliers. Use cell references in the formulado NOT us

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

(Show your work in this cell to solve for the net decimal equivalent for the two suppliers.)
Supplier 1
(0.80)(0.90)(0.95) = 0.648
Supplier 2
(0.82)(0.88)(0.93) = 0.671088 (rounded)

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

Excel Formula

S1

S2

1st CDF

0.80

0.82

2nd CDF

0.90

0.88

3rd CDF

0.95

0.93

NDE=

0.684

0.671088

In the yellow cells, create the Microsoft Excel formulas that will give y
decimal equivalent for the two suppliers. Use cell references in the formul
use numbers.

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

(Show your work in this cell to solve for the trade discount for the two suppliers.)
Supplier 1
1 - 0.684 = 0.316
0.316($300) = $94.80
Supplier 2
1 - 0.671088 = 0.328912
0.328912(300) = $98.67 (rounded)

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

Excel Formula

S1

S2

PP=

$300.00

$300.00

NDE

0.684

0.671088

TD=

$94.80

$98.67

In the yellow cells, create the Microsoft Excel formulas that will give y
discount for the two suppliers. Use cell references in the formulado NOT
numbers.

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

(Show your work in this cell to solve for the amount due by September 26 and the amount saved by paying early.)
Due by Sept. 26: $250(0.98) = $245
Amount saved by paying early: $250 - $245 = $5

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

Excel Formula

Original
Cost=

$250.00

Discount=

2.00%

Due by
9/26=

$245.00

Amount
saved

$5.00

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

5. Assume that if students buy more than $250 of art supplies in one visit, they may put the charge on a student acc
terms of 2/10 EOM. If a student makes the purchase on September 16, on what day does the 2% discount expire? If th
purchase is made on September 26, on what day does the 2% discount expire? If you were an art student, which met
you prefer: 2/10, n/30, or 2/10 EOM?

(Use this cell to respond to the questions.)

If the purchase is made on September 16, the offer expires on October 10.
If the purchase is made on September 26, the offer expires on November 10.
Both discount periods are the same. If the student is not paying during the discount period and the purchase is made on September
2/10 EOM gives the student longer to pay.

ve and submit the assignment

any issues or successes you

different purchasing
purchasing modeling clay
a chain discount of 18/12/7
s, a) what is the net price
purchase her modeling clay

= $3.87

mulas that will give you the net

formulado NOT use numbers.

mulas that will give you the net

rences in the formulado NOT

mulas that will give you the trade

he formulado NOT use

erm to cover all of their art

counts to those students who
they may put it on a student
mount is due by September

y.)

mulas that will give you the

by paying early. Use cell

e on a student account with

scount expire? If the
tudent, which method would

made on September 26, the

Case 9-1 Template

INSTRUCTIONS: Read the case in the textbook. As a team, answer the questions in this spreadsheet, then save and subm
Excel attachment. Also, submit a 1-paragraph Microsoft Word document explaining any issues or successes you had in a

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?

(Show your work in this cell to solve for the markup percentage for a box of ginger tea.)
Ginger Tea Markup: $0.70/($2.59 + $0.21) = 0.25 = 25%

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

Excel Formulas

Cost per BT=

$2.59

S&H=

$0.21

P=

$0.70

Ginger Tea %
Markup

25.00%

In the yellow cells, create the Microsoft Excel formula that

percentage. Use cell references in the formulado NOT use nu

2. If the rice-filled heating pads sell for $7.00, $10.00, and $15.00 for small, medium, and large, respectively, w
each one?
(Show your work in this cell to solve for the markup percentages for small, medium, and large rice-filled heating pads.)
Small rice-filled heating pads
$7.00 - $5.00 = $2.00 markup, so $2.00/$5.00 = 40% markup for the small size
Medium rice-filled heating pads
$10.00 - $8.00 = $2.00 markup, so $2.00/$8.00 = 25% markup for the medium size
Large rice-filled heating pads
$15.00 - $12.00 = $3.00 markup, so $3.00/$12.00 = 25% markup for the large size

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

Small RFP Selling

Price=

$7.00

Medium RFP
Selling Price=

$10.00

Excel Formulas

Large RFP Selling

Price=

$15.00

Small RFP Cost=

$5.00

Medium RFP
Cost=

$8.00

Large RFP Cost=

$12.00

Small % Markup=

40.00%

Medium %
Markup=

25.00%

Large % Markup=

25.00%

In the yellow cells, create the Microsoft Excelformulas that

for small, medium, and large rice-filled heating pads. Use cell
use numbers.

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

(Show your work in this cell to solve for the profit she accumulates and the markup percentage based on cost she would hav
profit.)
Profit
2 small rice pads profit: $2 (2) = $ 4
4 medium rice pads profit: $2 (4) = $ 8
2 large rice pads profit: $3 (2) = $ 6
20 boxes of tea profit: $0.70 (20) = $ 14
Total profit= $32
Cost
2 small rice pads cost: $5 (2) = $ 10
4 medium rice pads cost: $8 (4) = $ 32
2 large rice pads cost: $12 (2) = $ 24
20 boxes of tea cost: $2.80 (20) = $ 56
Total cost= $122
Markup percentage based on cost= $32/$122 = 0.2623 = 26.23%

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

Medium RFP
Selling Price=

$10.00

Excel Formulas

Large RFP Selling

Price=

$15.00

BT Selling Price

$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

$32.00

Total Cost

$122.00

Markup % based
on cost=

26.23%

In the yellow cells, create the Microsoft Excel formulas tha

cost, and required markup percentage based on cost. Use cell
use numbers.

4. What prices should Karen charge (using the markup percentage) to obtain the same amount of profit as she
Do not include shipping.

(Show your work in this cell to solve for the profit she accumulates and the markup percentage based on cost she would hav
profit.)
Selling price = cost + (cost * markup)
small rice pads $5 + ($5)(26%) = $6.30
medium rice pads $8 + ($8)(26%) = $10.08
large rice pads $12 + ($12)(26%) = $15.12
boxes of tea $2.80 + ($2.80)(26%) = $3.53

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

Excel Formulas

Small RFP Cost=

$5.00

Medium RFP
Cost=

$8.00

Large RFP Cost=

$12.00

BT Cost

$2.80

Markup % based
on cost=

26%

Small RFP Selling

Price=

$6.30

Medium RFP
Selling Price=

$10.08

Large RFP Selling

Price=

$15.12

BT Selling Price

$3.53

In the yellow cells, create the Microsoft Excel formulas tha

on markup percentage. Use cell references in the formulado

heet, then save and submit the assignment as one Microsoft

or successes you had in answering these questions.

nswers.

oft Excel formula that will give you the ginger tea markup
he formulado NOT use numbers.

nd large, respectively, what is the markup percentage on

-filled heating pads.)

ers.

oft Excelformulas that will give you the markup percentages

ed heating pads. Use cell references in the formulado NOT

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

ulate? What markup percentage based on cost would she

sed on cost she would have to use to make the same amount of

ers.

oft Excel formulas that will give you the total profit, total
ge based on cost. Use cell references in the formulado NOT

amount of profit as she did with the cost plus method?

sed on cost she would have to use to make the same amount of

ers.

oft Excel formulas that will give you the selling prices based
rences in the formulado NOT use numbers.