Useful Calculations

This topic describes various margin and selling price calculation formulas used in the product pricing module of iTopia:

Gross Margin Percentage Calculations

Gross Margin percentages appear in various report and display programs throughout iTopia. If the selling price is in a foreign currency, then the A/R Exchange Rate is extracted from the Currency Entry (ibis_cc22) table and applied in the calculation so that sales match the cost value, which is always expressed in domestic dollars.

  • Gross Margin % (GM%) - calculated based on the net selling price (in domestic dollars) and average cost for the product. The calculation is as follows:

    (Net Selling Price * Exchange Rate) - Average Cost * 100
    (Net Selling Price * Exchange Rate)

  • Replacement GM% - calculated based on the net selling price (in domestic dollars) and replacement cost for the primary supplier for the product. The calculation is as follows:

    (Net Selling Price * Exchange Rate) - Replacement Cost * 100
    Net Selling Price * Exchange Rate

Selling Price Calculation Methods

This section describes the calculation formulas for some of the selling price calculation methods available in iTopia.

Note: Rounding rules from Company Control (CC00/Inventory) will be applied to the calculated selling price.

If the selling price being calculated is within a foreign currency price list, then the A/R exchange rate is extracted from Currency Entry (ibis_cc22) and applied in the calculation to arrive at a foreign selling price.

  • Pricing Method = Profit or Gross Margin % - the selling price is calculated based on the entered (desired) GM% and the replacement cost for the primary supplier for the product. The selling price is calculated as follows:

    Replacement Cost = Domestic Selling Price
    (1.0 - GM%)

    Domestic Selling Price = Foreign Selling Price
    Exchange Rate

    Example:
    Replacement Cost = 60.00 CAN
    Desired GM% = 25
    US Exchange Rate = 1.2

    60 / (1 - .25) = 80.00 CAN
    80 CAN / 1.2 = 66.67 US

  • Pricing Method = Markup on Cost or Landed Cost Markup - the selling price is calculated based on the entered markup % and the replacement cost for the primary supplier for the product. The selling price is calculated as follows:

[Replacement Cost * (Markup% / 100)] + Replacement Cost = Domestic Selling Price

    Domestic Selling Price / Exchange Rate = Foreign Selling Price

    Example:
    Replacement Cost = 60.00 CAN
    Markup% = 25%
    US Exchange Rate = 1.20

    [60.00 * (25 / 100) + 60.00] = 75.00 CAN
    75.00 CAN / 1.20 = 62.50 US

  • Pricing Method = FOB Cost Markup - the selling price is calculated based on the entered markup % and the FOB cost for the primary supplier for the product. The FOB cost is found on the Cost Factor folder of the P/O Purchasing Information (ibis_po13) program and is calculated as the domestic purchase price + any landing factors flagged as "Include in FOB Cost". The selling price is calculated as follows:

    [FOB Cost * (Markup% / 100)] + FOB Cost = Domestic Selling Price

    Domestic Selling Price / Exchange Rate = Foreign Selling Price

    Example:
    FOB Cost = 30.00 CAN
    Markup% = 25%
    US Exchange Rate = 1.20

    [30.00 * (25 / 100) + 30.00] = 37.50 CAN
    37.50 CAN / 1.20 = 45.00 US

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