da.2answer must be correct or i will give down vote Saxon Corporation sells a product for $48 with costs of $33 per unit. Saxon uses a 9% rate of return for all its calculations. The CFO estimates that thereis a 20% probability of a prospective new customers seeking credit will go bankrupt within the next 6 months. Customer wishes to place an order for1,000 units of the product.Multiple ChoiceОExtend credit; total benefit of $3,780Extend credit; total benefit of $3,880Extend credit; total benefit of $3,980Extend credit; total benefit of $4,080

To calculate the total benefit of extending credit, we need to consider the expected revenue, cost,…

Answered: Saxon Corporation sells a product for…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 10MC

See similar textbooks

Similar questions

Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses. A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as a result of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)
Saxon Corporation sells a product for $48 with costs of $33 per unit. Saxon uses a 9% rate of return for all its calculations. The CFO estimates that there is a 20% probability of a prospective new customers seeking credit will go bankrupt within the next 6 months. Customer wishes to place an order for 1,000 units of the product. Multiple Choice O Extend credit; total benefit of $3,780 Extend credit; total benefit of $3,880 Extend credit; total benefit of $3,980 Extend credit; total benefit of $4,080
Locust Software sells computer training packages to its business customers at a price of $101. The cost of production (in present value terms) is $99. Locust sells its packages on terms of net 30 and estimates that about 7% of all orders will be uncollectible. An order comes in for 30 units. The interest rate is 1.3% per month. Required: a-1. Calculate the profit or loss if this is a one-time order and sale will not be made unless credit is extended a-2. Should the firm extend credit if this is a one-time order? b. What is the break-even probability of collection? c-1. Now suppose that if the customer pays this month's bill, they will place an identical order in each month indefinitely and can be safely assumed to pose no risk of default.Calculate the present value of the sale. c-2. Should credit be extended? d. What is the break-even probability of collection in the repeat-sales case? Complete this question by entering your answers in the tabs below. Req A1 A2 and Req C1 C2 and B D…
Locust Software sells computer training packages to its business customers at a price of $101. The cost of production (in present value terms) is $99. Locust sells its packages on terms of net 30 and estimates that about 7% of all orders will be uncollectible. An order comes in for 30 units. The interest rate is 1.3% per month. Required: a-1. Calculate the profit or loss if this is a one-time order and sale will not be made unless credit is extended a-2. Should the firm extend credit if this is a one-time order? b. What is the break-even probability of collection? c-1. Now suppose that if the customer pays this month's bill, they will place an identical order in each month indefinitely and can be safely assumed to pose no risk of default.Calculate the present value of the sale. c-2. Should credit be extended? d. What is the break-even probability of collection in the repeat-sales case? Complete this question by entering your answers in the tabs below. Req A1 A2 and Req C1 C2 and в D…
integrity inc. sells computor training packages to its business customers at a price of $91 the cost of production (in present value term) is $87, integrity sells its packages om term of net 30 and estimated that about 8% of all orders will be uncollectible an oder in for 25 units the interest rate is 0.6% per month given the above information Present value of revenue is? The expected profit from a sale is? If this is a one time Order and the sale will be made unless credit is expected the firm (should not) extend credit the break even probability of collection is ?% No suppose that if a customer pays the months bill it will place an identical order in each month indefinitely and can be safely assume to pose no risk of default in this case since the present value of the perpetuity of profit is? And the present value of sale is ? The credit should be extended the break even point probability of collection in the repeat- sales is
Equate Inc. sells products with a cost of $25,000 during the year to customer for $55,000. It is Equate’s policy to accept returns up to 60 days after the date of purchase. Equate estimates that there is a 60% probability that returns will be 3% of sales and a 40% probability that returns will be 2.5% of sales. What is the transaction price under a) expected value method b) most likely amount method? Choices: A: $53,460 B: $53,350 A: $53,350 B: $53,460 A: $53,460 B: $54,450 A: $54,450 B: $53,460 A: $53,350 B: $53,350
The Branding Iron Company sells its irons for $57 apiece wholesale. Production cost is $47 per iron. There is a 32% chance that wholesaler Q will go bankrupt within the next eight months. Q orders 1,000 irons and asks for eight months’ credit. Assume that the discount rate is 12% per year, there is no chance of a repeat order, and Q will pay either in full or not at all. a. Should you accept the order? Provide your explanations with calculations b. What is the break-even probability of default for wholesaler Q in this order? c. Suppose that customers who do not default become repeat customers and place the same order every period forever. What is the break-even probability of default?
I need the second Req please! Thank you.
Subject - account Please help me. Thankyou.
LYD Corp. receives an order from a new customer, amounting $55,000. LYD Corp. uses 45-day credit terms as a standard. The Variable Cost Ratio is 75.00% of Sales, Collection Expense Ratio 15.00% of Sales and the Interest Rate is 13.00% (365 days per year). Instruction: (show your calculations and round to 2 decimal places) Should the order be accepted? Defend your answer. Please ASAP
(D) Vallie Enterprise sells a product that cost $200 per unit and has a monthly demand of 500 units. The annual holding cost per unit is calculated as 2% of the unit purchase price. It costs the business $30 to place a single order. The maximum number of units sold for any one week is 150 and minimum sales 80 units. The vendor takes anywhere from 2 to 4 weeks to deliver the merchandise after the order is placed. The EOQ model is appropriate. i) What is the cost minimizing solution for this product each year? ii) Determine the re-order level, minimum inventory level and maximum inventory level for the product.
(D) Vallie Enterprise sells a product that cost $200 per unit and has a monthly demand of 500 units. The annual holding cost per unit is calculated as 2% of the unit purchase price. It costs the business $30 to place a single order. The maximum number of units sold for any one week is 150 and minimum sales 80 units. The vendor takes anywhere from 2 to 4 weeks to deliver the merchandise after the order is placed. The EOQ model is appropriate. i) What is the cost-minimizing solution for this product each year?ii) Determine the re-order level, minimum inventory level and maximum inventory level for the product.

SEE MORE QUESTIONS

Recommended textbooks for you

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Principles of Cost Accounting

Accounting

ISBN:

9781305087408

Author:

Edward J. Vanderbeck, Maria R. Mitchell

Publisher:

Cengage Learning

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Principles of Cost Accounting

Accounting

ISBN:

9781305087408

Author:

Edward J. Vanderbeck, Maria R. Mitchell

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS