### 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 Expe nses for Distributor-Wholesalers

........................... C-1
Table C.3.1 Distributor-Wholesaler Increm ental 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, Mar kups 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 indicate s which expenses were assumed to scale with only the baseline markup and which were assu med to scale with both the baseline and incremental markups. As described in chapter 6, s ection 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 Ex penses 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 Subj ects: 2002. EC 02-42SX-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 Bu reau. 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 pe rcent) 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 th e values for ‘Occupancy Expe nses’ 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 ma rkup distribution for BVM equipment that were available only at the
national level as shown in Error! Reference source not found. . DOE estimated the baseline

C-1 BVM_FINAL_FR_TSD_AppendixC_08-14-09.doc

### markup and its distribution (sta ndard deviation from the mean) from the known national level
data.

Table C.3.1 Distributor-Wholesaler Increm ental 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. Wholes ale Trade, Miscellaneous Subjects: 2002 . EC02-42SX

SB; Table 6. Gross Margin and Its Components for Me rchant 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/sv sd/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 relati ve standard deviation) is the st andard deviation as a percent of the baseline markup, which is 12.1 percent. DOE al so assumed that the distributor-wholesaler incremental markup has the same relative standard deviation as distribu tor-wholesaler baseline markup.

This analysis was done to understand the level of variability in the distributor-wholesaler markup. Random variation in distributor-wholesal er markups, however, has not been introduced into the life-cycle cost (LCC) analysis.

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