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Sergeu [11.5K]
3 years ago
11

6.3) Annie Lennox recently took over a cleaning supply store. Her predecessor always ordered carpet shampoo in quantities of 100

units. Annie is reevaluating this policy. Based on her analysis, the cost to place each order is $35 and the holding cost is $8 per shampoo bottle per year. The annual demand for this product is 2500 bottles. Should Anne change the current order policy and, if so, how much can she save
Business
1 answer:
nata0808 [166]3 years ago
7 0

Answer:

Annie should increase the order size to 148 bottles per order and she will be able to save $91.85 per year.

Explanation:

we must calculate the economic order quantity (EOQ) in order to determine the size of the order that reduces costs:

EOQ = √[(2 x S x D) / H]

  • S = cost per order = $35
  • D = annual demand = 2,500 bottles of shampoo
  • H = holding cost per unit) = $8

EOQ = √[(2 x 35 x 2,500) / 8] = √(175,000 / 8) = √21,875 = 147.90 ≈ 148 bottles of shampoo

total cost when ordering 100 bottles = (25 orders x $35) + (100/2 x $8) = $875 + $400 = $1,275

total cost when ordering 148 bottles = (16.89 orders x $35) + (148/2 x $8) = $591.15 + $592 = $1,183.15

Annie will save $1,275 - $1,183.15 = $91.85 per year

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On January 1, Concord Corporation issued $4300000, 9% bonds for $3995000. The market rate of interest for these bonds is 10%. In
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Answer:

The correct option is D,$292,500

Explanation:

The unamortized bond discount is the balance of the bond discount left at the end of first year when that year portion of bond discount has been amortized.

In order to ascertain the balance of the unamortized bond discount,we prepare the bond schedule showing how much was amortized in the year as follows:

Bal b/f                 interest expense at10%   coupon payment 9%           Bal c/f

$3,995,000         $399,500                         $387,000                     $4,007,500

The amortized interest is the difference between the interest expense based on the cash proceeds and the coupon payment calculated on the face value of $4.3 million

amortized discount=$399,500-$387,000=$12,500

Total bond discount=$4,300,000-$3,995,000=$305,000

unamortized discount=$305,000-$12,500=$292,500

                           

3 0
3 years ago
Which of the following statements is true of​ just-in-time (JIT)​ purchasing? A. Only disadvantage of JIT purchasing is the high
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B. In JIT​ purchasing, raw materials​ (or goods) are purchased so that products are delivered just as needed for production or sales.

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The success of JIT is dependent on management ability to forecast sales volumes accurately.  Management must work with reliable suppliers to ensure that materials are available when required. JIT lower's the cost of inventory management by eliminating the need to store huge quantities of materials. It reduces wastage by doing away with losses that arise due to the storage of bulk materials.

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Small business usually still struggle in paying all the necessary expense for daily operation. So they cannot afford the marketing strategy that require a lot of capital (such as  magazine, billboards, television, etc.).  Business start to put more into marketing strategies when it inteded to be a player in a large market.

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Martha receives $200 on the first of each month. Stewart receives $200 on the last day of each month. Both Martha and Stewart wi
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Answer:

Instructions are below.

Explanation:

Giving the following information:

Martha receives $200 on the first of each month. Stewart receives $200 on the last day of each month. Both Martha and Stewart will receive payments for 30 years. The discount rate is 9 percent, compounded monthly.

To calculate the present value, first, we need to determine the final value.

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FV= {A*[(1+i)^n-1]}/i + {[A*(1+i)^n]-A}

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FV= {A*[(1+i)^n-1]}/i

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PV= 366,148.70/1.0075^360

PV= $24,856.37

Martha has a higher present value because the interest gest compounded for one more time.

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