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Applications continue
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Sample Case: ABC Corporation has produced a valve costing $2.26
to manufacture. They want a profit of 25% over production cost and are
offering a trade discount to distributors of 30 /15/15. Determine the following per unit amounts:
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Amount of Markun
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Net Price
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Dealer Discount Ratio
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List Price
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Solution
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| | Enter: | | | See Displayed: | | |
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amount of markup
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net price
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| 1 SAVE 30 % – 15 % – 15 % – | | | | $ |
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dealer discount ratio (net price/$1 of list price)
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list price
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Cash Discounts
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Cash Discounts Cash discounts are offered to retailers by
manufacturers/wholesalers as an incentive for prompt payment. Typical
terms of payment would be 2/10, n/30.
This means that the buyer is entitled to deduct 2% of the invoice
amount if paid within 10 days. Otherwise, the net amount of invoice is
due in 30 days. Another type of discount is termed “anticipation” where
the buyer is entitled to the 2% discount plus an additional discount of a
percentage of the invoice balance if paid within 60 days.
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This calculation finds the standard and anticipated discounts, and the net invoice amount when discount rates (terms), amount of invoice, and dates of invoice and payment are known. Information is entered as follows:
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Enter invoice amount, press SAVE .
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Enter standard discount rate, press % to obtain amount of discount.
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Press – to obtain balance.
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Enter anticipation discount rate, press %.
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Enter days remaining, press ×.
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Enter number of days used as interest base (either 360 or 365), press ÷ to obtain the amount of anticipation discount.
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Press – to obtain net invoice amount.
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