### 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 Expens es for Distributor-Wholesalers ...........................C-1 Table C.3.1 Distributor-Wholesaler Incremen tal Markup Standard Deviation* ........................C-2

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### APPENDIX C. DETAILED DATA FOR EQUIPMENT PRICE MARKUPS

C.1 INTRODUCTION
This appendix provides further details on info rma tion presented in chapter 6, Markups for Equipment Price Determination, for beverage vending machines (BVMs).

C.2 DISTRIBUTOR-WHOLESALER COST DATA

Table 6.3.1 of chapter 6, secti on 6.3 shows distributor-wholesal er revenues and costs in per-dollar sales revenue from U.S. Ce nsus 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 assume d 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 scal e with baseline and incremental costs are marked up when there is an in cremental 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 $9,464,858 68.51% Baseline Gross Margin $4,351,133 31.49% Labor Expenses: Salaries and benefits $1,779,622 12.88% Baseline Occupancy Expenses Baseline Other Operating Expenses $1,340,750 9.70% Baseline & Incremental* Profit Before Income Taxes $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 Oper ation for the United States: 2002 US 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 Me rchant 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 reven ue values shown in Table 6.3.1. *All of the percentage values scale with th e baseline costs, but only a fraction of the 9.7% 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% of the percentage val ue (9.7%) shown because data were not available to calculate ‘O ccupancy Expenses’ and ‘Other Op erating Expenses’ separately. The 50% apportionment is support by evidence from other rulemakings that indi cates that the values for ‘Occupancy Expenses’ and ‘Other Operating Expenses’ are nearly equal, and, if a diff erence exists, the value for ‘Oth er Operating Expenses’ is no m ore than 1 to 2 percentage point higher th an 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 markup and its distribution (sta ndard deviation from the mean) from the known national level data.

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### Table C.3.1 Distributor-Wholesaler Incremental Markup Standard Deviation*

Number of Firms Sales ($1000) Cost of Goods Sold ($1000) Gross Margin ($1000) 4,715 13,815,991 CV = 2.3%* 9,464,858 CV = 2.4%** 4,351,133 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%**, respectively. Sources: U.S. Census Bureau. Decem ber 2005. Wholesale Trade, Miscella neous Subjects: 2002. EC02-42SX-SB. Table 6. Gross Margin and Its Components for Merchant Wholesalers for the United States: 2002 U.S. Census Bureau. 2004. Table 4. Estim ated Coefficients of Variation of A nnual Sales, End-of-Year Inventories, Purchases,Gross Margins, and Gross Margin/Sales Ratios fo r Merchant Wholesalers, ex cluding Manufacturers' Sales Branches and Offices (MSBOs) @ http://www.census.gov/sv sd/www/atstable4. txt Notes: The data are at the national level a nd, unless otherwise noted, are for NAICS 432440. *The coefficients of variation (CV) are for NAICS 4234, wh ich is all Professional and co mmercial 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.