# Case 8-3 Template Assignment

March 14, 2016

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.

Variables Used S1 S2

PP=

1st CDF

2nd CDF

3rd CDF

Excel Formula NP=

In the yellow cells, create the Microsoft® Excel® formulas that will give you the net prices for the two suppliers. Use cell references in the formula—do NOT use numbers.

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.)

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

Variables Used S1 S2

1st CDF

2nd CDF

3rd CDF

Excel Formula NDE=

In the yellow cells, create the Microsoft® Excel® formulas that will give you the net decimal equivalent for the two suppliers. Use cell references in the formula—do NOT use numbers.

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.

Variables Used S1 S2

PP=

NDE

Excel Formula TD=

In the yellow cells, create the Microsoft® Excel® formulas that will give you the trade discount for the two suppliers. Use cell references in the formula—do NOT use numbers.

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?

“(Show your work in this cell to solve for the amount due by September 26 and the amount saved by paying early.)

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

Variables Used Original Cost=

Discount=

Excel Formula Due by 9/26=

Amount saved

In the yellow cells, create the Microsoft® Excel® formulas that will give you the amount due by September 26 and the amount saved by paying early. Use cell references in the formula—do NOT use numbers.

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?

“(Use this cell to respond to the questions.)

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