APPENDIX C. DETAILED DATA FOR EQUIPMENT PRICE MARKUPS
 

TABLE OF CONTENTS
 

C.1 INTRODUCTION ...........................................................................................................C-1
 

C.2 DISTRIBUTOR-WHOLESALER COST DATA ...........................................................C-1 

C.3 ESTIMATION OF DISTRIBUTOR-WHOLESALER MARKUP STANDARD 

DEVIATIONS .................................................................................................................C-1
 

LIST OF TABLES 

Table C.2.1 Disaggregated Costs and Expenses for Distributor-Wholesalers ...........................C-1 

Table C.3.1 Distributor-Wholesaler Incremental Markup Standard Deviation ..........................C-2 

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APPENDIX C. DETAILED DATA FOR EQUIPMENT PRICE MARKUPS 

C.1	 INTRODUCTION 

This Technical Support Document (TSD) appendix C provides further details on 

information presented in TSD chapter 6, Markups for Equipment Price Determination, for 

beverage vending machines (BVMs). 

C.2	 DISTRIBUTOR-WHOLESALER COST DATA 

Table 6.3.1 of TSD chapter 6, section 6.3 shows distributor-wholesaler revenues and 

costs in per-dollar sales revenue from U.S. Census Bureau data. Table C.2.1 provides the 

national level breakdown of costs and expenses as provided by the U.S. Census Bureau. The 

column labeled “Scaling” in Table C.2.1 indicates which expenses were assumed to scale with 

only the baseline markup and which were assumed to scale with both the baseline and 

incremental markups. As described in chapter 6, section 6.3, only those expenses that scale with 

baseline and incremental costs are marked up when there is an incremental change in equipment 

costs. 

Table C.2.1 Disaggregated Costs and Expenses for Distributor-Wholesalers 

Item Dollar Value 

$1,000 

Percentage 

% 

Scaling 

Direct Cost of Equipment Sales: Cost of goods sold 

Gross Margin 

Labor Expenses: Salaries and benefits 

Occupancy Expenses 

Other Operating Expenses 

Profit Before Income Taxes 

9,464,858 68.51 Baseline 

4,351,133 31.49 

1,779,622 12.88 Baseline 

1,340,750 9.70 Baseline 

Baseline & Incremental* 

1,230,761 8.91 Baseline & Incremental 

Sources: U.S. Census Bureau. December 2005. Wholesale Trade, Miscellaneous Subjects: 2002. EC02-42SX-SB; 

Table 4. Detailed Type of Operation for the United States: 2002; U.S. Census Bureau. December 2005. Wholesale 

Trade, Miscellaneous Subjects: 2002. EC02-42SX-SB; Table 6. Gross Margin and Its Components for Merchant 

Wholesalers for the United States: 2002; US Census Bureau. December 2005. Wholesale Trade, Miscellaneous 

Subjects: 2002. EC02-42SX-SB; Table 7. Gross Profit and Its Components for Merchant Wholesalers for the 

United States: 2002 

Note: The distributor-wholesaler costs and expenses are percentage values of sales as opposed to the per-dollar of 

sales revenue values shown in Table 6.3.1. 

*

All of the percentage values scale with the baseline costs, but only a fraction of the 9.7 percent value scales with 

the incremental costs in the ‘Other Operating Expenses’ category. As noted in Table 6.3.1, this fraction is 

estimated to be 50 percent of the percentage value (9.7 percent) shown because data were not available to calculate 

‘Occupancy Expenses’ and ‘Other Operating Expenses’ separately. The 50 percent apportionment is support by 

evidence from other rulemakings that indicates that the values for ‘Occupancy Expenses’ and ‘Other Operating 

Expenses’ are nearly equal, and, if a difference exists, the value for ‘Other Operating Expenses’ is no more than 1 

to 2 percentage point higher than the value for ‘Occupancy Expenses.’ 

C.3	 ESTIMATION OF DISTRIBUTOR-WHOLESALER MARKUP STANDARD 

DEVIATIONS 

The U.S Department of Energy (DOE) used U.S. Census survey data to estimate the 

distributor-wholesaler markup distribution for BVM equipment that were available only at the 

national level as shown in Error! Reference source not found.. DOE estimated the baseline 

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markup and its distribution (standard deviation from the mean) from the known national level 

data. 

Table C.3.1 Distributor-Wholesaler Incremental Markup Standard Deviation 

Number of Firms Sales Cost of Goods Sold Gross Margin 

$1000 $1000 $1000 

4,715 13,815,991 9,464,858 4,351,133 

CV = 2.3%* CV = 2.4%** CV = 5.0%* 

Markup = Gross Margin / Cost of Goods Sold = 0.46
 

The markup standard deviation and coefficient of variation are 0.06** and 12.1 percent**, respectively. 

Sources: U.S. Census Bureau. December 2005. Wholesale Trade, Miscellaneous Subjects: 2002. EC02-42SXSB; Table 6. Gross Margin and Its Components for Merchant Wholesalers for the United States: 2002; U.S. 

Census Bureau. 2004. Table 4. Estimated Coefficients of Variation of Annual Sales, End-of-Year Inventories,
 

Purchases,Gross Margins, and Gross Margin/Sales Ratios for Merchant Wholesalers, excluding Manufacturers'
 

Sales Branches and Offices (MSBOs) @ http://www.census.gov/svsd/www/atstable4.txt
 

Notes: The data are at the national level and, unless otherwise noted, are for NAICS 432440. 

*

The coefficients of variation (CV) are for NAICS 4234, which is all Professional and commercial equipment and 

supplies merchant wholesalers. 

**Calculated. 

The distributor-wholesaler markup of 0.46 has a standard deviation of 0.06. The 

coefficient of variation (or relative standard deviation) is the standard deviation as a percent of 

the baseline markup, which is 12.1 percent. DOE also assumed that the distributor-wholesaler 

incremental markup has the same relative standard deviation as distributor-wholesaler baseline 

markup. 

This analysis was done to understand the level of variability in the distributor-wholesaler 

markup. Random variation in distributor-wholesaler markups, however, has not been introduced 

into the life-cycle cost (LCC) analysis. 

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