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 Artist’s Palette purchases its inventory from a number of suppliers and each supplier offers different purchasing discounts. The manager of The Artist’s 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?

“(Use this cell to answer parts a, b, and c. Be sure to show your work.)

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

”

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.)

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.)

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

4. The Artist’s 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 Artist’s Palette offers discounts to those students who pay sooner than required. Assume that if students buy more than $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?

5. Assume that if students buy more than $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?

Case 9-1 Template

Karen is an acupuncturist with a busy practice. In addition to acupuncture services, Karen sells teas, herbal supplements, and rice- filled heating pads. Because Karen’s primary income is from acupuncture, she feels that she is providing the other items simply to fill a need and not as an important source of profits. As a matter of fact, the rice- filled heating pads are made by a patient who receives acupuncture for them instead of paying cash. The rice- filled pads cost Karen $ 5.00, $ 8.00, and $ 12.00, respectively, for small, medium, and large sizes. The ginger tea, relaxing tea, cold & flu tea, and detox tea cost her $ 2.59 per box plus $ 5.00 shipping and handling for 24 boxes. Karen uses a cost plus markup method, whereby she adds the same set amount to each box of tea. She figures that each box costs $ 2.59 plus $ 0.21 shipping and handling, which totals $ 2.80, then she adds $ 0.70 profit to each box and sells it for $ 3.50. Do you think this is a good pricing strategy? How would it compare to marking up by a percent-age of the cost?

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:

• 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?

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 markup percentage on each one?

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

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