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marissa [1.9K]
3 years ago
9

West Calder Fabrication is trying to decide which of the following four cargo ships that should be used to ship their products,

and has gathered the following information about each:
Cargo Ship Annual Fixed Cost Variable Cost (per unit)
American Integrity $40,000 $3
Sam Laud, $35,000 $5
Bums Harbor $30,000 $9
1. If West Calder has to ship 4,500 products annually, which cargo ship should West Calder use?
2. Over what range of storage levels would West Calder Fabrication prefer to use Sam Laud?
Business
1 answer:
Ksenya-84 [330]3 years ago
5 0

Answer:

1. West Calder should use American since it is the cheapest with a cost of $53,500

2. The range of storage levels would West Calder Fabrication prefer to use Sam Laud is 1,250 to 2,500

Explanation:

1.

Determine the costs of shipping 4,500 units of products for each cargo ship

<em>Step 1: American integrity</em>

Total cost=Annual fixed cost+(cost per unit×number of units)

where;

Annual fixed cost=$40,000

Cost per unit=$3

Number of units=4,500 units

replacing;

Total cost=40,000+(3×4,500)=40,000+13,500=$53,500

American Integrity will cost $53,500

<em>Step 2: Sam Laud</em>

Total cost=Annual fixed cost+(cost per unit×number of units)

where;

Annual fixed cost=$35,000

Cost per unit=$5

Number of units=4,500 units

replacing;

Total cost=35,000+(5×4,500)=35,000+22,500=$57,500

Sam Laud will cost $57,500

<em>Step 3: Bums Harbor</em>

Total cost=Annual fixed cost+(cost per unit×number of units)

where;

Annual fixed cost=$30,000

Cost per unit=$9

Number of units=4,500 units

replacing;

Total cost=30,000+(9×4,500)=30,000+40,500=$70,500

Bums Harbor will cost $70,500

West Calder should use American since it is the cheapest with a cost of $53,500

2.

In order to use Sam Laud, Sam Laud's total cost should be less than or equal to American Integrity's cost.

35,000+5 n=40,000+3 n

40,000-35,000=5 n-3 n

2 n=5,000

n=5,000/2=2,500

n should be less or equal to 2,500

The minimum number of units that should be used in order to use Sam Laud can be determined as follows;

35,000+5 n=30,000+9 n

35,000-30,000=9 n-5 n

4 n=5,000

n=5,000/4=1,250

The range of storage levels would West Calder Fabrication prefer to use Sam Laud is 1,250 to 2,500

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Complete Question:

PA9.

LO 7.3 Fit band's estimated sales are:

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OCTOBER                                         131,982

NOVEMBER                                         195,723

DECEMBER                                         249,283

JANUARY                                         124,298

FEBRUARY                                         124,284

MARCH                                                  124,373

What are the balances in accounts receivable for January, February, and March if 65% of sales is collected in the month of sale, 25% is collected the month after the sale, and 10% is second month after the sale?

Answer:

                                                           JANUARY   FEBRUARY   MARCH

Amount received from November sales    19,572

Amount received from December sales    62,321        24,928  

Amount received from January sales        80,794        31,075       12,430

Amount received from November sales  <u>               </u>     <u>              </u>      <u> 31,071 </u>

TOTAL                                                     <u>$162,687 </u>    <u>$56,003</u>     <u>$43,501 </u>

<u />

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Amount received = Sales Figure of that month * Percentage

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