Useful Calculations

This topic describes various Margin and Selling Price calculation formulas used in the Pricing modules of Enterprise:

Gross Margin % Calculations

Gross Margin %'s appear in various report and display programs throughout Enterprise. If the Selling Price is in a foreign currency, then the A/R Exchange Rate is extracted from Maintain Currency Table (CC22) 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 Enterprise.

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 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 PO13/Cost Factor folder and is calculated as the Domestic Purchase Price + any Landing Factors flagged as "Include in FOB Cost". The formula is the same as the Markup example above except the FOB Cost is used instead of Replacement Cost.