Measuring Marketing

Chapter 75 Cost Per Sales Dollar

Measurement Need

To measure the cost per sales dollar of each credit sale.

Solutioni

Cost per sales dollar is measured as follows:

$C_{SD}=\frac{C_{oi}}{S_{ci}}$

Where

CSD = cost per sales dollar

Coi = total departmental operating costs in period i

Sci = total credit sales in period i

To illustrate, let’s assume that a food supplier receives an order from a grocery customer for five cases of canned peaches. The supplier sends the five cases to the retailer, along with a bill with net thirty terms (meaning that the retailer must pay the bill within thirty days or an interest penalty will be charged in addition to the principal amount owed). If the retailer does not pay, then the supplier incurs collection ...