Wisconsin Administrative Code
Department of Agriculture, Trade and Consumer Protection
ATCP 90-139 - Trade and Consumer Protection
Chapter ATCP 105 - Sales Below Cost
Subchapter I - General Provisions
Section ATCP 105.007 - Calculating the cost of merchandise

Universal Citation: WI Admin Code ยง ATCP 105.007

Current through August 26, 2024

(1) INVOICE COST CALCULATIONS.

(a) Except as provided in par. (b), the invoice cost of merchandise sold at wholesale or retail shall be calculated by examining the cost shown on the most recent invoices of the merchandise.

(b) The invoice cost of cigarettes and other tobacco products, fermented malt beverages, intoxicating liquor, wine or motor vehicle fuel, whether sold at wholesale or retail, shall be calculated by examining the cost shown on the invoices of the product actually being sold. Invoices of product purchased more than 30 days before the date of sale may not be used. For the purposes of this paragraph, wholesalers and retailers of these products shall use the first-in first-out accounting method when determining what product is actually being sold.

Note: Section 100.30(2) (am) 1. and (c) 1. a, Stats., calculate the retail and wholesale cost of cigarettes and other named products according to the "invoice cost of the merchandise... within 30 days prior to the date of sale." Some of these products, however, turn over and change prices so rapidly that a 30-day old invoice may not reasonably compare to the cost of product actually being sold. For example, a tanker load of motor vehicle fuel may sell within three to four days. In periods of rising prices, using a 30-day old invoice would create an artificially low price for motor vehicle fuel and would not be a "bona fide cost", as required by s. 100.30(2) (b), Stats.

If a retailer of cigarettes or other named products has not purchased merchandise within 30 days before the date of sale, the retailer must use "replacement cost" as the basis for determining prices.

(3) TRADE DISCOUNTS.

(a) In this subsection, "trade discount" means a manufacturer's or wholesaler's payment or allowance, either deducted from the purchase price or subsequently paid.

(b) A trade discount may be considered as a reduction from invoice or replacement cost if all of the following exist:
1. The trade discount is not a customary discount for cash.

2. The trade discount is calculated on the basis of the quantity or dollar amount of merchandise actually purchased or sold.

3. The trade discount is fully earned and determinable at the time of sale.

4. In the case of retail sales of fermented malt beverages, intoxicating liquor or wine, the trade discount is not in the form of cash, a check or other equivalent in ready money or merchandise.

The trade discount provisions in this subsection apply only to calculations of the cost of merchandise, not calculations of the cost of doing business. Section ATCP 105.08 specifies rules for using discounts when cigarette jobbers or distributors calculate the cost of doing business. The following examples describe the effect of this subsection:

(1) An advertising allowance of 20¢ per unit purchased may be considered a cost reduction. An advertising allowance of a flat $1,000 is not a cost reduction.

(2) A trade allowance calculated on the basis of quantity sold between April 1 and September 30 may not be used as a cost reduction until September 30, unless the retailer earns the full allowance prior to that date.

Section ATCP 105.007(3) (b) 4. incorporates the provisions of 63 OAG 516, interpreting s. 100.30(2) (k), Stats.

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