Homework Help is Here – Start Your Trial Now!
Business
Finance
Problem 1 GM is comparing its inventory costs to that of Toyota. GM has 45 cars in each of its 225 dealership with an average cost of P17,600 and a selling price of P23,900. Toyota has 34 dealership and has an average of 6 vehicles in each location with an average cost of P14,800 and a selling price of P19,650 per vehicle. The two companies sell about the same volume of cars per year. Insurance costs the company 2% of the cost of the vehicles, interest on the money tied up amounts to 12% per year, and other management costs amount to 6% of cost of these items. Req 1: How much would GM save per year if it uses the Toyota model and reduces its number of dealership to that of Toyota? Req 2: How much would GM save per year if it uses the Toyota model but keeps the same number of dealerships? Req 3: How much would GM save per year if it uses the Toyota model and reduces its number of dealerships to that of Toyota and reduces its costs also to the Toyota's level?

Problem 1 GM is comparing its inventory costs to that of Toyota. GM has 45 cars in each of its 225 dealership with an average cost of P17,600 and a selling price of P23,900. Toyota has 34 dealership and has an average of 6 vehicles in each location with an average cost of P14,800 and a selling price of P19,650 per vehicle. The two companies sell about the same volume of cars per year. Insurance costs the company 2% of the cost of the vehicles, interest on the money tied up amounts to 12% per year, and other management costs amount to 6% of cost of these items. Req 1: How much would GM save per year if it uses the Toyota model and reduces its number of dealership to that of Toyota? Req 2: How much would GM save per year if it uses the Toyota model but keeps the same number of dealerships? Req 3: How much would GM save per year if it uses the Toyota model and reduces its number of dealerships to that of Toyota and reduces its costs also to the Toyota's level?

Essentials Of Investments
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
See similar textbooks
icon
Related questions
Question
Problem 1 GM is comparing its inventory costs to that of Toyota. GM has 45 cars in each of its 225 dealership with an average cost of P17,600 and a selling price of P23,900. Toyota has 34 dealership and has an average of 6 vehicles in each location with an average cost of P14,800 and a selling price of P19,650 per vehicle. The two companies sell about the same volume of cars per year. Insurance costs the company 2% of the cost of the vehicles, interest on the money tied up amounts to 12% per year, and other management costs amount to 6% of cost of these items. Req 1: How much would GM save per year if it uses the Toyota model and reduces its number of dealership to that of Toyota? Req 2: How much would GM save per year if it uses the Toyota model but keeps the same number of dealerships? Req 3: How much would GM save per year if it uses the Toyota model and reduces its number of dealerships to that of Toyota and reduces its costs also to the Toyota's level?
Transcribed Image Text:Problem 1 GM is comparing its inventory costs to that of Toyota. GM has 45 cars in each of its 225 dealership with an average cost of P17,600 and a selling price of P23,900. Toyota has 34 dealership and has an average of 6 vehicles in each location with an average cost of P14,800 and a selling price of P19,650 per vehicle. The two companies sell about the same volume of cars per year. Insurance costs the company 2% of the cost of the vehicles, interest on the money tied up amounts to 12% per year, and other management costs amount to 6% of cost of these items. Req 1: How much would GM save per year if it uses the Toyota model and reduces its number of dealership to that of Toyota? Req 2: How much would GM save per year if it uses the Toyota model but keeps the same number of dealerships? Req 3: How much would GM save per year if it uses the Toyota model and reduces its number of dealerships to that of Toyota and reduces its costs also to the Toyota's level?
Expert Solution
steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Inventory Management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS