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money in currency or check or if the member store elects an off-
invoice credit.3
3 The following table is based on a table prepared by
Tammie Coffee, petitioner’s chief financial officer, to
illustrate the point in the text.
Consolidated Foods, Inc.
Comparison of gross profit on AFI’s ledger of off-invoice/at-show
payment:
Item #27024
Off invoice At show
Sale to AFI customer:
List price $76.20 $76.20
Less: usual discount 1.20 1.20
Subtotal: Price before markup 75.00 75.00
Add Markup: 7.5% 5.25 5.25
Subtotal 80.25 80.25
Less: Off-invoice show money discount .75 n/a
Total amount billed to member store 79.50 80.25
AFI purchase price from vendor:
List cost 76.20 76.20
Less:
Usual discount 1.20 1.20
Off-invoice show money discount .75 n/a
Total cost of goods sold 74.25 75.00
Gross profit on AFI general
ledger (margin):
Amount billed to member store 79.50 180.25
Less: cost of goods sold 74.25 75.00
Total margin 5.25 5.25
1 We note that, if it is assumed that the member store
receives a payment of $0.75 at the food show, it would have to
subtract that receipt ($0.75) from the amount it pays petitioner
($80.25) to determine its cost for the goods it purchased
($79.50).
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Last modified: November 10, 2007