Question (c) Complete the following table for CPC for the 12-month contract peri
ID: 2751517 • Letter: Q
Question
Question (c) Complete the following table for CPC for the 12-month contract period ending August 31st 2014.
Illustrative Example of a Vendor Allowances Arrangement Presented below is a hypothetical example that illustrates a vendor allowances arrangement. Constent wth aid Cohig and sell chc Tesco routinely negotiates contracts with its vendors for purchasing products at best prices, and passes on the savings to its customers. One such annual contract with CPC, a leading consumer products company was initiated on September 1t 2013. The contract stipulated that Tesco will continue to receive 8 percent refund of the purchase price if it bought at least the same quantity (3.5 billion units) of CPC products as it did in the previous contract period, regularly priced at £2 per unit (total purchases of £7 billion). In addition, depending on the level of purchases during the contract period, the contract stipulated a lower (or higher) refund, as followsExplanation / Answer
The estimate is correct , no corrections required.
Income effect of sales allowance Vendor's Book CPC Amount in million pound Current contract period Previous contarct period Reported amt Corrections if any Corrected amt Sales Revenue 7,000.00 7,300.00 - - COGS 4,900.00 5,110.00 - - Gross Margin 2,100.00 2,190.00 - - SGA expenses 560.00 584.00 - - Opearting Profit 1,540.00 1,606.00 - - Sales growth over prev period 4.29% Gross Margin rate 30% 30%