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Galina-37 [17]
3 years ago
8

A produce distributor uses 779 packing crates a month, which it purchases at a cost of $12 each. The manager has assigned an ann

ual carrying cost of 39 percent of the purchase price per crate. Ordering costs are $27. Currently the manager orders once a month. How much could the firm save annually in ordering and carrying costs by using the EOQ
Business
1 answer:
labwork [276]3 years ago
5 0

Answer:

$1,498.86

Explanation:

Given that;

Packing of crates per month(u) = 779

Annual carrying cost of 39% of the purchase price per crate

Ordering cost (S) = $27

D = 779 × 12 = $9,348 crates per year

H = 0.39P

H = 0.39 × $12

H = $4.68 crates per year

Total ordering cost = D/Q × S

= ( $9,348 / 779 ) × $27

= $324

Total Holding cost = Q / 2 × H

= ( 779 / 2 ) × $4.68

= $1,822.86

Annual savings = Total holding cost - Total ordering cost

= $1,822.86 - $324

= $1,498.86

The firm would be saving $1,498.86 annually.

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Morgarella [4.7K]

Based on the payment you can afford, the interest rate, and the number of years, the loan you can afford is $6,774.15

<h3>What size of a loan can you afford?</h3>

First find the monthly interest rate:

= 4% /12

= 1/3%

Number of periods:

= 3 x 12

= 36 months

The loan you can afford can be found as:

= Payment x ( 1 - (1 + rate) ^ -number of periods) / rate

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4 0
2 years ago
Coronado Company has recorded bad debt expense in the past at a rate of 1.5% of accounts receivable, based on an aging analysis.
boyakko [2]

Answer:

The cumulative effect of changing the estimate for bad debt expenses is $0.

Explanation:

Changes in accounting estimates are shown for the period of change and future period if the change affects future period also. These changes are not carried back to adjust prior years.

The cumulative effect of changing the estimated bad debt rate to 2% from 1.5 % will be shown only for 2020.

Increased bad debt expense in 2020 will be $108,400 when 2% rate was used.

If the new rate had been used in prior years, cumulative bad debt expense would have been $380,000 instead of $285,000. In 2020, bad debt expense will be $108,400 instead of $81,300.

Coronado’s tax rate = 30%  

So bad debt expense will increase by $108,400 and Allowance for doubtful accounts will increase by $108,400 in 2020.

But the cumulative effect of changing the estimated bad debt rate will be 0.

Change in bad debt expenses estimate is not retrospective also tax will not change due to changes in estimate.

Therefore, The cumulative effect of changing the estimate for bad debt expenses is $0.

7 0
3 years ago
While creating its afi strategy framework, gordon's consultants decided what markets the firm should compete in. by doing this,
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By deciding what markets should the firm compete in, the Gordon's Consultants devised corporate strategy.

<h3>What is a corporate strategy?</h3>

A strategy, which is a part of functioning of a business organization and involves highly efficient decision-making for the purpose of achieving its organizational goals, is known as a corporate strategy.

Hence, the significance of corporate strategy is aforementioned.

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4 0
2 years ago
The principal of the time value of money is probably the single most important concept in financial management. One of the most
morpeh [17]

Answer:

B. The trend between the present and future values of an investment

6 0
3 years ago
Concord Corporation has outstanding accounts receivable totaling $1.29 million as of December 31 and sales on credit during the
strojnjashka [21]

Answer:

Concord Corporation has outstanding accounts receivable totaling $1.29 million as of December 31 and sales on credit during the year of $6.30 million. There is also a debit balance of $6100 in the allowance for doubtful accounts. If the company estimates that 2% of its accounts receivable will be uncollectible, the balance in the allowance for doubtful accounts after the year-end adjustment to record bad debt expense will be  $25800 - option B.

Explanation:

Estimated uncollectible = 2% of account receivables

Allowance account’s adjusted balance must be the same as estimated uncollectible balance.

Therefore, the adjusted Allowance for Doubtful Account = $1.29 millions x 2%

= $1.29*0.02

The adjusted Allowance for Doubtful Account  = $ 0.0258 millions or $ 25,800.

Therefore, the correct answer is $ 25,800 - option B.

3 0
3 years ago
Read 2 more answers
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