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Material Catalog - Item formula

We tend to get asked the question "what is the formula for adding the OH markup and Profit for material catalog items as they are not making sense". It is not LMN adding them incorrectly as there is a specific formula that is used.

Material item formula:

Cost

Plus Shipping

Plus Warranty

Plus Tax

= Subtotal + OH Markup

= Subtotal divided by (1 - profit as a decimal number)

= item price

 

For example:

Cost $26.40 + shipping (0%) + warranty (0%) + tax (0%) = $26.40

$26.40 + OH Markup (10%) = $29.04

Profit = 13.8% = 0.138

$29.04 / (1 - 0.138) = $33.69 is the item price

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