Answer:
Annual depreciation 2021= $22,771.67
Explanation:
Giving the following information:
Purchase price= $109,400
Salvage value= $4,300
Useful life in miles= 120,000
It was driven 26,000 miles in 2021.
To calculate the depreciation expense, we need to use the units-of-activity method of depreciation:
Annual depreciation= [(original cost - salvage value)/useful life of production in miles]*miles drive
2021:
Annual depreciation= [(109,400 - 4,300) / 120,000]*26,000
Annual depreciation= $22,771.67
The Grandview Company issues 1 million shares of common stock with a par value of $0.12 for $16.00 a share. The entry to record this transaction includes a debit to Cash for:
Answer:
$16,000,000
Explanation:
This question requires us to give the amount arising in cash assets after this transaction.
We simply have to focus on the price offered for the share on the date of sale which is $16.00. Thus, cash proceeds (debited) will be :
Cash Proceeds = Share Price × Number of Shares issued
= $16.00 × 1,000,000 shares
= $16,000,000
The rest of the Journal entry for this transaction will be :
Debit : Cash ($16.00 × 1,000,000) $16,000,000
Credit : Common Stock ($0.12 × 1,000,000 shares) $120,000
Credit : Paid In Excess of Par ($15,88 × × 1,000,000 shares) $15,880,000
On November 1, 2017, National Company sold inventory to a foreign customer. The account will be settled on March 1 with the receipt of 200,000 foreign currency units (FCU). On November 1, National also entered into a forward contract to hedge the exposed asset. The forward rate is $0.80 per unit of foreign currency. National has a December 31 fiscal year-end. Spot rates on relevant dates were:
Answer:
$162,000 and $4,000 loss
Explanation:
The computation of the adjusted basis in the account receivable and the gain or loss is as follows:
As on Nov 1, the foreign currency rate on date of sale is $0.83
The account receivable should be recorded at
= 200,000 × $0.83
= $166,000
Now the foreign currency rate is reduced to $0.81
So the loss is recorded
= ($0.83 - $0.81) × $2,00,000
= $4,000 loss
And, Receivable balance on Dec 31 is
= $166,000 - $4,000
= $162,000
A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 16,000 defective units that cost $5.50 per unit to manufacture. The units can be a) sold as is for $3.10 each, or b) reworked for $4.50 each and then sold for the full price of $8.60 each. What is the incremental income from selling the units as scrap and reworking and selling the units
Answer and Explanation:
The computation of the incremental income is as follows;
Particulars Sale as scrap Rework
Sales of reworked units
(16,000 × $8.60) $137,600
Sales of scrap units
(16,000 × $3.10) $49,600
Cost to rework units
(16,000 × $4.50) ($72,000)
Incremental income (loss) $49,600 $65,600
What has held Russia back from progressing to a free market?
Answer:
I dont knpwo
Explanation:
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Gouda Company and Cheddar Company had the same sales, total costs, and income from operations for the current fiscal year; yet Gouda has a lower break-even point than Cheddar. Explain the reason. Assuming Gouda is above the break-even point, what will happen for each unit sale
Answer:
If both companies have the sames sales volume, total costs and income from operations, the reason why Gouda has a lower break even point is that their variable costs are lower. We use the contribution margin per unit to calculate the break even point and the contribution margin per unit = sales price - variable costs. The question states that total costs are equal, but it doesn't say anything about variable or fixed costs.
Assuming that Gouda is above break even point, each sale will generate a higher operating profit since the contribution margin is higher.
Explanation:
On October 31, 2018, Alternative Landscapes discarded equipment that had a cost of $26,920. Accumulated Depreciation as of December 31, 2017, was $25,000. Assume annual depreciation on the equipment is $1,920. Journalize the partial-year depreciation expense and disposal of the equipment.
Answer:
Alternative Landscapes
Journal Entries:
October 31, 2018:
Debit Depreciation on Equipment Expense $1,600
Credit Accumulated Depreciation $1,600
To record the depreciation expense for the period.
Debit Disposal of Equipment $26,920
Credit Equipment $26,920
To record the discarding of equipment.
Debit Accumulated Depreciation $26,600
Credit Disposal of Equipment $26,600
To record the discarding of equipment.
Debit Loss on Disposal $320
Credit Disposal of Equipment $320
To record the loss arising from the discarding of equipment.
Explanation:
a) Data and Calculations:
Cost of equipment = $26,920
Accumulated depreciation = $25,000
Current year's depreciation = $1,920 * 10/12 = $1,600
Total accumulated depreciation = $26,600
Loss on disposal = $320 ($26,920 - $26,600)
I just wanna know how do you know the percentage please help,,,,,Marble Company purchased a machine costing $137,000, terms 3/10, n/30. The machine was shipped FOB shipping point and freight charges were $3,700. The machine requires special mounting and wiring connections costing $11,700. When installing the machine, $3,000 in damages occurred. Materials costing $3,200 are used in testing and adjusting the machine to produce a satisfactory product. Compute the cost recorded for this machine assuming Marble paid within the discount period. I just want to know how do you know the percentage no one explains!! Thank you
Answer:
$150,253.00
Explanation:
The cost to be recorded will include all the direct cost of installing the machine less the discount allowed.
The total cost of the machine will be
cost price $137,000
Freight charges $3,700
mounting & wires $11,000
testing materials $3,200
Total cost $154,900
The machine was paid with the discount period. The tern3/10, n 30 means that the buyer will get a 3% discount if they pay with ten days of the invoice date. Full payment is expected within 30 days if the buyer does not pay within ten days.
the discount amount will be 3% of $154,900
=3/100 x $154,900
=0.03 x $154,900
=$4,647.00
the amount recorded will be
=$154,900.00 - $4,647.00
= $150,253.00
A leader who tries to connect with their workers by understanding their wants and needs is practicing ______.
a.
Courage
b.
Dependability
c.
Empathy
d.
Vision
Answer:
C
Explanation:
On July 15, 2021, Ortiz & Co. signed a contract to provide EverFresh Bakery with an ingredient-weighing system for a price of $87,600. The system included finely tuned scales that fit into EverFresh’s automated assembly line, Ortiz’s proprietary software modified to allow the weighing system to function in EverFresh’s automated system, and a one-year contract to calibrate the equipment and software on an as-needed basis. (Ortiz competes with other vendors who offer ongoing calibration contracts for Ortiz’s systems.) If Ortiz was to provide these goods or services separately, it would charge $58,000 for the scales, $10,000 for the software, and $32,000 for the calibration contract. Ortiz delivered and installed the equipment and software on August 1, 2021, and the calibration service commenced on that date. Assume that the scales, software and calibration service are all separate performance obligations. How much revenue will Ortiz recognize in 2021 for this contract?
Answer:
Ortiz & Co.
Ortiz & Co will recognize $71,341 revenue in 2021 for this contract.
Explanation:
a) Data and Calculations:
Contract price = $87,600
Separate performance contracts:
Scale Software Calibration Total
Separate $58,000 $10,000 $32,000 $100,000
Percentage 58% 10% 32%
Contract $50,808 $8,760 $28,032 $87,600
2021 revenue
recognition 100% 100% 5/12 (42%)
Recognized
revenue $50,808 $8,760 $11,773 $71,341
2022 revenue 0 0 $16,259
b) The revenue for the calibration of the equipment and software will not be fully recognized in 2021 because it is a one-year contract. Since the calibration commenced on August 1, 2021, only revenue for 5/12 months or 42% (amounting to $11,773) will be recognized in 2021. The remaining 58% or 7/12 months' revenue of $16,259 will be recognized in 2022.
Impairment--Jessica Fullem Corp. was determining whether to write off some equipment. The equipment has a cost of $900,000 with depreciation to date of $400,000 as of December 31, 2020. On December 31, management projected the future net cash flows from this equipment to be $300,000 and the fair value to be $330,000. the company intends to use this equipment in the future, Determine if there is a loss on impairment and how much.
Answer:
-$170,000
Explanation:
Cost of equipment = $900,000
Accumulated dep = $400,000
Book value = Cost - Accumulated dep = 900,000 - 400,000 = 500,000
Future net cash flow from equipment = 300,000
Fair value of equipment= 330,000
Recoverable amount = Higher of value in use / Fair value
Recoverable amount = Higher of 300,000 or 330,000
Recoverable amount = $330,000
Impairment loss = Recoverable amount - Book value (as Recoverable amount is lower than book value)
Impairment loss = 330,000 - 500,000
Impairment loss = -$170,000
The following statements regard product differentiation in monopolistic competition. Label the following statements as being either true or false. Each label may be used more than once.1. Product differentiation can include small physical changes to the product, physical location of where the product is sold, and perceptions about the product brought about by advertising. 2. Monopolistic competition through the use of product differentiation promotes productive and allocative efficiency automatically since the market forces are at work. 3. One of the problems of product differentiation is that the price of differentiated products is higher than they would normally be.
Answer:
1. true
2. false
3. true
Explanation:
A monopolistic competition is when there are many firms selling differentiated products in an industry. A monopoly has characteristics of both a monopoly and a perfect competition. the demand curve is downward sloping. it sets the price for its goods and services.
An example of monopolistic competition are restaurants
In a monopolistic competition, price is higher than marginal costs, so the market cannot be productively efficient. Also, price is higher than marginal cost, so monopolistic competition cannot be allocative efficient.
Product differentiation is primarily a marketing approach used to persuade consumers to choose one brand or product over another in a competitive marketplace of competitors.
What are the four monopolistic competition situations?Monopolistic competition describes an industry in which several firms provide similar (but not perfect) equivalents for their products or services.
First, the market contains a big number of enterprises, none of which are large. Second, there is open admission and departure into the market; there are no entry or exit barriers.
Third, each firm in the market creates a distinct product. This last need distinguishes monopolistic competition from perfect competition.
Thus, the labels of these three statements are 1) True
2) False
3) True
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Polk Company manufactures basketballs. Materials are added at the beginning of the production process and conversion costs are incurred uniformly. Production and cost data for the month of July 2016 are as follows. Production Data - Basketballs Units Percentage Complete Work in process units, July 1 500 60% Units started into production 1,000 Work in process units, July 31 600 40% Cost Data - Basketballs Work in process, July 1 Materials $750 Conversion Costs 600 $1,350 Direct materials 2,400 Direct labor 1,580 Manufacturing overhead 1,240 Instructions: Calculate the following The equivalent units of production for materials and conversion costs. The units costs of production for materials and conversion costs. The assignment of costs to units transferred out and in process at the end of the accounting period. Prepare a production cost report for the month of July for the basketballs
Answer and Explanation:
The computation is shown below:
a.
1. Calculation of the equivalent units
Particulars Physical units % Material % Conversion cost
Units transferred
out 900 100% 900 100% 900
Ending
work in process 600 100% 600 40% 240
Equivalent
units 1,500 1,140
2. Cost per equivalent unit is
Particulars Material Conversion cost
Beginning
inventory $750 $600
Cost during
period $2,400 $2,820
Total cost $3,150 $3,420
Divided by
Equivalent
units $1,500 $1,140
Cost per
equivalent unit $2.1 $3
3. Transferred out cost is
= (3 + 2.1) × 900
= $4,590
And, the ending work in process cost is
= (600 ×$2.1) + (240 × $3)
= $1,960
2. Now the preparation of the production report is presented below:
Beginning work in process $1,350
Cost during period $5,220
Total cost accounted for $6,570
Transferred out cost $4,590
Ending work in process $1,960
Total cost accounted as $6,570
State the meaning of managerial economics, its characteristics, and the contribution of economic theory for Managerial Economics?
Answer:
Explanation:
Managerial Economics like its name suggests, is a culmination of both economics theory and managerial theory. It deals with the applying of some economic theories, tools, and or even methodologies in order to solve practical problems in a business. A lot of the times, these business decisions do not only affect daily decisions, it also extends to, and affects the economic power. Some characteristics include it being;
Pragmatic.
It also makes use of the theory of firm.
It uses the help of macroeconomics.
Aiming to render any form of help to the management.
And lastly, it is also a scientific art.
Exercise 153Chetola Corporation has 120,000 shares of $5 par value common stock outstanding. It declared a 15% stock dividend on June 1 when the market price per share was $13. The shares were issued on June 30.Prepare the necessary entries for the declaration and payment of the stock dividend.
Answer and Explanation:
The journal entries are shown below:
On June 1
Stock dividend (120000 × 15% × $13) $234,000
To Common Stock dividend distributable (120000 × 15% × 5) $90,000
To Paid in capital in excess of par-Common Stock $144,000
(being stock dividend declared is recorded)
On June 30
Common Stock dividend distributable $90,000
To Common Stock $90,000
(Being the payment of stock dividend is recorded)
Tom is a loan officer that persuades Jerry to sign up for an exotic mortgage that turns out to be very expensive for him and probably not the best financial choice. This is an example of an action that:_____
Answer: is legal but ethically questionable
Explanation:
Th information given in the question is an example of an action that is legal but ethically questionable.
This is because exotic mortgage will be profitable for the mortgage firm and the loan officer will benefit from these but on the other hand, Jerry did not make the best financial decision as he may feel the impact of the decision in a negative way. Even though what Tom did is legal, ethically, it is wrong.
People do things for several reasons. This is an example of an action that is legal but ethically questionable.
The fact that a thing is legal but sometimes they are not ethical. Example is not keeping a promise is legal, but it is thought to be an unethical behavior.Tom's action is legal but it raise a lot of questions as to the reason he is pushing Jerry to sign up for the exotic mortgage.
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meaning of hazard in risk management and examples
Answer: Identifying Hazards Means Identifying Sources of Risks
Explanation:
A hazard is basiclly something that could harm something else or someone.
So it’s basically now adverse affect
example; to people as health effects, to organizations as property or equipment losses, or to the environment).
I really hope this will help I’m sorry if I didn’t say what you wanted but there you go. (:
During 2022, Pharoah Company reported cash provided by operations of $985000, cash used in investing of $851000, and cash used in financing of $236000. In addition, cash spent on fixed assets during the period was $342000. Average current liabilities were $806000 and average total liabilities were $2128000. No dividends were paid. Based on this information, what was Pharoah free cash flow
Answer:
$643,000
Explanation:
Calculation for Pharoah free cash flow
Using this formula
Free Cash flow =Cash provided by operations -Cash spent on fixed assets
Let plug in the formula
Free cash flow=$985000-$342000
Free cash flow=$643,000
Therefore Pharoah free cash flow will be $643,000
Two new companies start to produce HDTVs. This results in _____ in the _____ HDTVs.
an increase, supply of
an increase, demand for
no change, supply of
no change, demand for
Answer:
an increase, supply of
Explanation:
Answer:
AN INCREASE SUPPLY OF
Explanation:
trust me bro
Bird Brain Co. reported net income of $46,500 for the year ended December 31, 2021. January 1 balances in accounts receivable and accounts payable were $23,000 and $24,500 respectively. Year-end balances in these accounts were $21,000 and $29,800, respectively. Assuming that all relevant information has been presented, Bird Brain's cash flows from operating activities would be: Multiple Choice $46,500. $39,200. $53,800. $49,800.
Answer:
$53,800
Explanation:
Cash flow from operating activities = Net income + ( Beginning accounts receivable - Ending accounts receivable) + ( Ending accounts payable - Beginning accounts payable)
= $46,500 + ($23,000 - $21,000) + ($29,800 - $24,500)
= $46,500 + $2,000 + $5,300
= $53,800
Therefore, Bird's brain cash flow from operating activities is $53,800
One hundred identical mortgages are pooled together into a pass-through security. Each mortgage has a $150,000 principal, a fixed annual interest rate of 8 percent (paid monthly), and is fully amortized over a term of 30 years. What is the monthly payment on the mortgage pass-through
Answer:
The monthly payment on the mortgage pass-through is $110,064.69.
Explanation:
The monthly payment on the mortgage pass-through can be calculated using the formula for calculating the present value of an ordinary annuity as follows:
PV = M * ((1 - (1 / (1 + r))^n) / r) …………………………………. (1)
Where;
PV = Present value or principal of the pass-through = 100 * $150,000 = $15,000,000
P = Monthly payment on the mortgage pass-through = ?
r = monthly interest rate = fixed annual interest rate / 12 = 8% / 12 = 0.08 / 12 = 0.00666666666666667
n = number of months = 30 years * 12 months = 360
Substitute the values into equation (1) and solve for M, we have:
$15,000,000 = M * ((1 - (1 / (1 + 0.00666666666666667))^360) / 0.00666666666666667)
$15,000,000 = M * 136.283494133963
M = $15,000,000 / 136.283494133963
M = $110,064.69
Therefore, the monthly payment on the mortgage pass-through is $110,064.69.
CHAPTER 3: Frank is a friend of yours and works with you at the same company. He is a well-respected and trusted employee. He has two young children and is a leader in his community. You have discovered that Frank has embezzled $3,000 over a period of several years. While this is not much money for such a large company, you suspect that if you don’t report him, the problem may get worse. On the other hand, he has young children, and he has done so much good in the company and the community. If you report him, he may go to prison because your company has an aggressive fraud prosecution policy. Should you report him or are there any other alternatives ways to deal with this problem available to you?
Answer:
Alternative Ways! (Maybe?)
Explanation:
Depending on the relationship your character has with this Frank, you could pick an alternative way, which would be talking with Frank and discussing why he smuggled the $3,000. If you were to talk to him and convince him to stop stealing this money, he wouldn't get in trouble but hopefully, he would stop stealing from the company.
Hope that helps!
Cantor Corporation acquired a manufacturing facility on four acres of land for a lump-sum price of $8,200,000. The building included used but functional equipment. According to independent appraisals, the fair values were $3,240,000, $4,320,000, and $3,240,000 for the building, land, and equipment, respectively. The initial values of the building, land, and equipment would be: Building Land Equipment a. $ 3,240,000 $ 4,320,000 $ 3,240,000 b. $ 3,240,000 $ 4,320,000 $ 540,000 c. $ 2,460,000 $ 3,280,000 $ 2,460,000 d. None of these answer choices are correct.
Answer: c. $ 2,460,000 $ 3,280,000 $ 2,460,000
Explanation:
Sum the fair values from the independent appraisals up;
= 3,240,000 + 4,320,000 + 3,240,000
= $10,800,000
The fair value proportions of the Fixed assets will be used to calculate their value in the lump sum.
Building
= 3,240,000/10,800,000 * 8,200,000
= $2,460,000
Land
= 4,320,000/10,800,000 * 8,200,000
= $3,280,000
Equipment
= 3,240,000/10,800,000 * 8,200,000
= $2,460,000
Uvaqil353 is a division of a large corporation. Last year the division had total sales of $20,660,000, net operating income of $1,888,760, and average operating assets of $7,100,000. (ID#77728) Q) What is the Uvaqil353's turnover (closest to)?
Answer:
2.91
Explanation:
Turnover = Total sales / Average operating assets
Turnover = $20,660,000 / $7,100,000
Turnover = 2.909859154929577
Turnover = 2.91
So therefore, Uvaqil353's turnover is closest to 2.91
As of December 31, Frappe Company has a balance of $11,000 in accounts receivable. Of this amount, $1,100 is past due and the remainder is not yet due. Frappe has a credit balance of $105 in the Allowance for Doubtful Accounts. Frappe Company estimates its bad debt losses using the aging of receivables method, with estimated bad debt loss rates equal to 3% of accounts not yet due and 10% of past due accounts. How will the Bad Debt Expense account be included in the required adjusting journal entry at year-end
Answer:
Debit of $302
Explanation:
Provision required on AR past due = 1,100 * 10% = $110
Provision required on AR not yet due = (11,000-1,100) *3% = 9900 * 3% = $297
Total Allowance for Doubtful Accounts required = Provision required on AR past due + Provision required on AR not yet due
Total Allowance for Doubtful Accounts required = $110 + $297
Total Allowance for Doubtful Accounts required = $407
Existing Allowance for Doubtful Accounts = $105
Bad Debt Expense = Total Allowance for Doubtful Accounts required - Existing Allowance for Doubtful Accounts
Bad Debt Expense = $407 - $105
Bad Debt Expense = $302
So, Bad Debt Expense account will be included in the adjusting journal entry at year-end as Debit of $302
According to arnold and bustos, which two sectors of the US economy are the mot carbon-intensive?
Answer: Transportation and electricity generation
Explanation:
According to Arnold and Bustos, the two sectors of the United States economy that are the most carbon-intensive are the transportation sector and the electricity generation sector.
The transportation sector contributes a lot to the emissions of greenhouse gas emissions as they typically come when fossil fuel for ships, vans, planes, motorcycles, cars etc are burned. Also, the generation of electricity is also carbon intensive as carbon is being powered in order to generate electricity.
The market price of ABC stock has been very volatile and you think this volatility will continue for several weeks. Thus, you decide to purchase one two-month call option contract on ABC stock with a strike price of $25 and an option price of $1.30. You also purchase one two-month put option on ABC stock with a strike price of $25 and an option price of $.50. What will be your total profit on these positions if the stock price is $25.60 on the day the options expire
Answer:
-$120
Explanation:
Calculation for What will be your total profit on these positions if the stock price is $25.60 on the day the options expire
Total profit = [1 × 100 × (-$1.30 - 25 + 25.60)] + [1 × 100 × (-$.50)]
Total profit = [1 × 100 × (-$0.70)] + [1 × 100 × (-$.50)]
Total profit =(-$70)+(-$50)
Total profit = -$120
Therefore What will be your total profit on these positions if the stock price is $25.60 on the day the options expire is -$120
Mountain View Resorts purchased equipment at the beginning of 2021 for $48,000. Residual value at the end of an estimated four-year service life is expected to be $8,700. The machine operated for 2,300 hours in the first year and the company expects the machine to operate for a total of 11,000 hours over its four-year life. Calculate depreciation expense for 2021, using each of the following depreciation methods: (1) straight-line, (2) double-declining-balance, and (3) activity-based.
Mountain View Resorts purchased equipment at the beginning of 2021 for $46,000. Residual value at the end of an estimated four- year service life is expected to be $6,100.
please mark as brainlist pleaseInformation for the Deuce Manufacturing Company follows. Compute the cost of goods manufactured for this company. Beginning raw materials inventory $ 53,200 Beginning work in process, inventory 78,400 Ending raw materials inventory 58,100 Ending work in process, inventory 98,000 Direct labor 149,800 Total factory overhead 105,000 Raw material purchases 210,000
Answer:
cost of goods manufactured= $440,300
Explanation:
First, we need to determine the direct material used in production:
Direct material used= beginning inventory + purchases - ending inventory
Direct material used= 53,200 + 210,000 - 58,100
Direct material used= $205,100
To calculate the cost of goods manufactured, we need to use the following formula:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 78,400 + 205,100 + 149,800 + 105,000 - 98,000
cost of goods manufactured= $440,300
In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in:________
a. tastes and preferences.
b. military capabilities.
c. the size of their economies.
d. relative abundance of factors of production.
e. labor productivities.
Answer:
d. relative abundance of factors of production
Explanation:
The Heckscher-Ohlin model is also known as the 2x2x2 model or H-O model. This model is used to assess the trade or mainly the equilibrium of a trade that is between two countries having different natural resources and different specialties.
The 2-factor, 2 good Heckscher-Ohlin model is used for the two countries which differs in the relative abundance of factors of production.
The Burdell Wheel and Tire Company assembles tires to wheel rims for use on cars during manufacture of vehicles by the automotive industry. Burdell wants to locate a low-cost supplier for the tires he uses in his assembly operation. The supplier will be selected based on total annual cost to supply Burdell's needs. Burdell's annual requirements are for 25,000 tires, and the company operates 250 days a year. The following data are available for two suppliers being considered.SUPPLIER SHIPPING QUANTITY PER SHIPMENT SHIPPING COSTS PRICE / TIRE (p) INVENTORY HOLD COSTS (H) LEAD TIME (DAYS) ADMIN. COSTSLEXINGTON TIRE2,000 $18,000 $30 $6.00 6 $15,000IRMO AUTO1,000 $25,000 $29 $5.80 4 $18,000Using the Total Cost Analysis for Supplier Selection, which supplier should Burdell choose? Provide details to justify your answer.
Answer:
LEXINGTON TIRE provides a higher unit cost but, a lower inventory cost overall considering the ordering, holding cost, and administrative cost generated.
The company should pick LEXINGTON TIRE
Explanation:
LEXINGTON TIRE
SHIPPING QUANTITY PER SHIPMENT 2,000
SHIPPING COSTS 18,000
PRICE per TIRE 30
INVENTORY HOLD COSTS (H) 6.00
LEAD TIME (DAYS) 6
ADMIN. COSTS 15,000
Total cost: 25,000 / 2,000 = 12.5 per year
shipment cost: $18,000 per shipment x 12.5 per year = 225,000
Materials cost:
25,000 tires x $30 per tire = 750,000
Holding cost:
lead time + average inventory
6 days x 100 tires + 2,000 tires / 2 = 1,600 tires on average
times $6 holding cost = 9,600
Total cost: Inventory 225,000 + 750,000 materials + 9,600 holding + 15,000 admin
total 999,600
IRMO AUTO
SHIPPING QUANTITY PER SHIPMENT 1,000
SHIPPING COSTS 25,000
PRICE per TIRE 29(p)
INVENTORY HOLD COSTS (H) 5.80
LEAD TIME (DAYS) 4
ADMIN. COSTS 18,000
Shipping per year: 25,000 / 1,000 = 25
Ordering cost: 25 shipment x 25,000 = 625,000
Materials:
25,000 x 29 = 725,000
Holding:
lead time + average inventory
4 days x 100 + 1000/2 = 900 units on inventory throughout the year
Holding cost: 900 x $5.80 = 5,220
Total Inventory cost:
Ordering 625,000 + materials 725,000 + 5,220 holding + 18,000 admin
total = 1,355,220