In preparation for a new season, a buyer determined a 58% initial markup was required for total purchases for the season in order to meet her gross margin goal of 50%. Her total budget for purchases was $1,923,000 at retail. Upon completion of purchase orders with all vendors, the buyer reviewed all purchases, which amounted to $807,660 at billed cost. At the end of the season, a vendor analysis was conducted to evaluate the purchase versus sales performance of each vendor's merchandise. The analysis revealed the purchase and sales results shown below: Original Retail $87,000 102,000 94,000 98,000 179,000 162,000 235,000 250,000 130,000 187,000 201,000 198,000 1,923,000 Vendor Billed Cost Net Sales Vendor A $38,520 43,270 41,270 42,230 74,200 68,030 96,990 101,280 52,270 75,320 83,260 91,020 807,660 $86,270 98,420 77,720 81,660 155,750 149,940 199,870 203,800 108,990 137,780 170,980 181,850 1,653,030 Vendor B Vendor C Vendor D Vendor E Vendor F Vendor G Vendor H Vendor I Vendor J Vendor K Vendor L Total 1. On a spreadsheet, type in the information given in the above table (Row and column headings look exactly like the above). 2. Add 3 columns to the right side of the above spreadsheet to show the following numbers (a) through (c). (a) Initial markup% planned for each vendor and total. (b) Maintained markup% achieved for each vendor and total. (c) Reductions% applied to each vendor's merchandise as well as total merchandise. 3. Type in appropriate headings, and compute figures in the added columns using formulas. 4. Format spreadsheet numbers as follows. Format dollar figures to Currency $, 0 decimal places Format percentages to %, 2 decimal places
In preparation for a new season, a buyer determined a 58% initial markup was required for total purchases for the season in order to meet her gross margin goal of 50%. Her total budget for purchases was $1,923,000 at retail. Upon completion of purchase orders with all vendors, the buyer reviewed all purchases, which amounted to $807,660 at billed cost. At the end of the season, a vendor analysis was conducted to evaluate the purchase versus sales performance of each vendor's merchandise. The analysis revealed the purchase and sales results shown below: Original Retail $87,000 102,000 94,000 98,000 179,000 162,000 235,000 250,000 130,000 187,000 201,000 198,000 1,923,000 Vendor Billed Cost Net Sales Vendor A $38,520 43,270 41,270 42,230 74,200 68,030 96,990 101,280 52,270 75,320 83,260 91,020 807,660 $86,270 98,420 77,720 81,660 155,750 149,940 199,870 203,800 108,990 137,780 170,980 181,850 1,653,030 Vendor B Vendor C Vendor D Vendor E Vendor F Vendor G Vendor H Vendor I Vendor J Vendor K Vendor L Total 1. On a spreadsheet, type in the information given in the above table (Row and column headings look exactly like the above). 2. Add 3 columns to the right side of the above spreadsheet to show the following numbers (a) through (c). (a) Initial markup% planned for each vendor and total. (b) Maintained markup% achieved for each vendor and total. (c) Reductions% applied to each vendor's merchandise as well as total merchandise. 3. Type in appropriate headings, and compute figures in the added columns using formulas. 4. Format spreadsheet numbers as follows. Format dollar figures to Currency $, 0 decimal places Format percentages to %, 2 decimal places
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...
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In order to fulfil her 50 percent gross margin objective, the buyer concluded that a 58 percent beginning markup was necessary for total purchases for the season. Her overall retail buying budget was $1,923,000. The buyer examined all purchases, which totaled $807,660 at invoiced cost, after completing purchase orders with all suppliers. A vendor study was undertaken at the conclusion of the season to examine the buy versus sales performance of each vendor's product.
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