Exam (elaborations)
Idis 240 Final Exam Questions And Answers Latest Update
- Course
- IDIS 240
- Institution
- Purdue University
Idis 240 Final Exam Questions And Answers Latest Update
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Solution 2024/2025Pepper
Idis 240 Final Exam Questions And Answers
Latest Update
List Price ANS✔✔ Listed price of a product
Selling Price ANS✔✔ -=list price - trade discounts
-the amount that appears on the invoice (amount paid by the customer)
-=COGS + Margin or =COGS +Markup
=COGS *(100% + Percent Markup)
=COGS / (100% - Percent Gross Margin)
Net Price ANS✔✔ Selling price - allowable discounts (cash discounts),
customer does not pay the full selling price and a cash discount is
announced to pay the bill asap
Net Sale ANS✔✔ -Actual money received by the distributor after discounts
and adjustments (substitutions, different quality or specifications, damaged
products or returned goods)
-=Net Price - Adjustments
(if no adjustments net sale = net price, if no cash discounts net price =
selling price, if no trade discounts selling price = list price)
, Solution 2024/2025
Pepper
Cost of Goods Sold (COGS) ANS✔✔ =Cost of Merchandise + Freight from
Manufacturer
Freight ANS✔✔ -cost to move an item from where it is manufactured to
either the distributors or customers location
-terms of sale specifies who is responsible for payment
-Large quantities and Least expensive transportation system - manufacturer
pays the freight
-Prepay and bill- manufacturer pays the freight but charges for it in the bill
-Free of Board (F.O.B) means (-who pays for transportation, who controls the
movement of shipment)
-F.O.B. Shipping point: The manufacturer puts the merchandise on the truck
after which it becomes the responsibility of the distributor
-F.O.B Destination: The manufacturer would put the merchandise on the
truck and pays for it to be delivered.
Trade Discounts ANS✔✔ -specified in "term of sale"
-Usually offered by the manufacturer owing to fluctuations in the market
conditions like the raw material cost
-Trade discounts may be extended further to customers by the distributor to
meet local, competitive market conditions
-Usually a discount off of a published list price or other published price
-lead discount is 25% (start with this), then subsequent discounts are 10%
and then 5%
-EXAMPLE (2000*0.75*0.90*0.95)
, Solution 2024/2025
Pepper
Trade Pricing ANS✔✔ -Pricing methodology that involves simply negotiating
the actual price that will be paid as opposed to "list price- trade discounts".
-Factors influencing are the same as those influencing trade discounts
-Also known as other names such as "matrix pricing" or just "pricing" //
markup
-two drivers to growth of the type (increasing complexity and system
capabilities)
Cash Discounts ANS✔✔ -Specified in "term of sale".
-Usually offered by the manufacturer to encourage early payments(no
difference between cash or check or mode of payment)
Special Orders ANS✔✔ -Usual products with some modification in design,
finish, materials or packing
-Cancellation charges are usually included in terms of sale. Conditions are
clearly stated as to who pays for the order if the order is cancelled.
Minimum Order vs Freight Allowed ANS✔✔ -Minimum Order: Manufacturer
specifies the minimum allowable order as the cost of ordering is high.
Distributors collectively buy material from the manufacturer for small orders
of various customers.
-Freight Allowed: The terms of sale should indicate the amount that must be
purchased to have the manufacturer pay the cost of freight for standard
shipment.
Claims ANS✔✔ -Terms of sale should indicate the time limit, address of
contact to claim for billing or shipping errors.
-Damages must be reported clearly specifying the problem before signing
the shipment
, Solution 2024/2025
Pepper
Returns ANS✔✔ -Terms should include information on how, when and where
items may be returned.
Cash Flow ANS✔✔ -Cash in Bank -> Purchased Inventory -> Sold inventory -
> Accounts receivable -> Cash in Bank
-Lesser the cash flow cycle, lesser cash is required to finance the business.
Pricing ANS✔✔ depends upon
-what the manufacturer wants it to be
-greatly influenced by the marketplace
-Supplier analyses the market and decides the price that it is willing to pay
for the product to the manufacturer. Trade discounts are how the distributor
is paid for his services to manufacturer and the customer.
Gross Margin ANS✔✔ -Margin or the difference between what distributor
pays for the product and what he spends. includes direct labor costs
-This is not gross profit and it is just a margin
-=selling price - COGS - Adjustments
Percent Gross Margin (PGM) ANS✔✔ (selling price-COGS)/Selling Price then
multiply by 100
Markup ANS✔✔ -how much money a distributor adds to the COGS
-Selling Price - COGS
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