39.The Milling Corporation has developed a new typeof widget. The local distributor expects toincrease his sales by 20% over the past year due tothis new development. Last year's sales were$600,000, at a selling price of $100 per unit. Asafety stock of 23 units has eliminates stockouts.The carrying costs are $5.00. The manager wouldlike to cut costs as much as possible and comes toget your advice for the economic orderingquantity. How much should he order?A)100 units.B)155 units.C)50 units.D)490 units.

Understanding the Problem: The Milling Corporation created a new widget. The local distributor…

Answered: 39. The Milling Corporation has…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Jupiter Game Company manufactures pocket electronic games. Last year Jupiter sold 25,000 games at $25 each. Total costs amounted to $525,000, of which $150,000 were considered fixed. In an attempt to improve its product, the company is considering replacing a component part that has a cost of $2.50 with a new and better part costing $4.50 per unit in the coming year. A new machine also would be needed to increase plant capacity. The machine would cost $18,000 with a useful life of six years and no salvage value. The company uses straight-line depreciation on all plant assets. (Ignore income taxes.) Jupiter Game Company manufactures pocket electronic games. Last year Jupiter sold 25,000 games at $25 each. Total costs amounted to $525,000, of which $150,000 were considered fixed. In an attempt to improve its product, the company is considering replacing a component part that has a cost of $2.50 with a new and better part costing $4.50 per unit in the coming year. A new machine also would…
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