Fundamentals of Corporate Finance with Connect Access Card
11th Edition
ISBN: 9781259418952
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Chapter 20, Problem 11QP
Summary Introduction
To determine: The economic order quantity (EOQ).
Introduction:
Economic order quantity refers to a model or tool designed for reducing the total costs (carrying costs and ordering costs) of the inventory.
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Students have asked these similar questions
Q5./Suppose that the demand for a product is 10000 per year and the
items are withdrawn uniformly. The order cost is 1000$ and the inventory
holding cost 6$ per item per year. If shortages cost 5$ per item per year.
Find:
1. The economic order quantity
2. Maximum inventory (I Max)
3. The number of ordering during the year (Order frequency)
4. The interval between two orders
Compute the Break-Even Point [LO5–5] Mauro Products distributes a single product, a woven basket whose selling price is $15 and whose variable expense is $12 per unit. The company’s monthly fixed expense is $4,200. Required: 1. Solve for the company’s break-even point in unit sales using the equation method. 2 . Solve for the company’s break-even point in dollar sales using the equation method and the CM ratio. 3. Solve for the company’s break-even point in unit sales using the formula method. 4 . Solve for the company’s break-even point in dollar sales using the formula method and the CM ratio.
QUESTION 5
A). What are inventories? Why are they important to manufacturing
companies?
B). What is the difference between FIFO and LIFO?
C). Given the following data, calculate a level production plan,
quarterly ending inventory, and average quarterly inventory. If
inventory carrying costs are $6 per unit per quarter, what is the
annual carrying cost? Opening and ending inventory are zero.
Quarter 1 Quarter 2| Quarter 3 Quarter 4 Totals
$
Forecast Demand
5000
7000
8500
9500
Production
Ending Inventory
Average Inventory
Inventory Cost
If the company always carries 100 units of safety stock, what is the annual
cost of carrying it?
D) Perform an ABC analysis on the following set of products.
Annual
Item
Demand
Unit Cost
A211
800
$9
B390
100
$90
C003
450
$6
D100
400
$100
E707
85
$2,000
F660
250
$320
G473
500
$75
H921
100
$75
Chapter 20 Solutions
Fundamentals of Corporate Finance with Connect Access Card
Ch. 20.1 - Prob. 20.1ACQCh. 20.1 - Prob. 20.1BCQCh. 20.2 - What considerations enter into the determination...Ch. 20.2 - Explain what terms of 3/45, net 90 mean. What is...Ch. 20.3 - Prob. 20.3ACQCh. 20.3 - Explain how to estimate the NPV of a credit policy...Ch. 20.4 - What are the carrying costs of granting credit?Ch. 20.4 - What are the opportunity costs of not granting...Ch. 20.4 - Prob. 20.4CCQCh. 20.5 - Prob. 20.5ACQ
Ch. 20.5 - Prob. 20.5BCQCh. 20.6 - Prob. 20.6ACQCh. 20.6 - What is an aging schedule?Ch. 20.7 - What are the different types of inventory?Ch. 20.7 - What are three things to remember when examining...Ch. 20.7 - Prob. 20.7CCQCh. 20.8 - Prob. 20.8ACQCh. 20.8 - Which cost component of the EOQ model does JIT...Ch. 20.A - Prob. 1ACQCh. 20.A - Prob. 1BCQCh. 20.A - Evaluating Credit Policy [LO2] Bismark Co. is in...Ch. 20.A - Credit Policy Evaluation [LO2] The Johnson Company...Ch. 20.A - Prob. 3QPCh. 20.A - Prob. 4QPCh. 20.A - Prob. 5QPCh. 20 - What is the difference between the accounts...Ch. 20 - Prob. 20.2CTFCh. 20 - Prob. 20.7CTFCh. 20 - Prob. 1CRCTCh. 20 - Prob. 2CRCTCh. 20 - Prob. 3CRCTCh. 20 - Five Cs of Credit [LO1] What are the five Cs of...Ch. 20 - Prob. 5CRCTCh. 20 - Prob. 6CRCTCh. 20 - Prob. 7CRCTCh. 20 - Prob. 8CRCTCh. 20 - Prob. 9CRCTCh. 20 - Prob. 10CRCTCh. 20 - Prob. 1QPCh. 20 - Size of Accounts Receivable [LO1] The Red Zeppelin...Ch. 20 - Prob. 3QPCh. 20 - Prob. 4QPCh. 20 - Terms of Sale [LO1] A firm offers terms of 1/10,...Ch. 20 - Prob. 6QPCh. 20 - Prob. 7QPCh. 20 - Prob. 8QPCh. 20 - Evaluating Credit Policy [LO2] Air Spares is a...Ch. 20 - Prob. 10QPCh. 20 - Prob. 11QPCh. 20 - Prob. 12QPCh. 20 - Prob. 13QPCh. 20 - Prob. 14QPCh. 20 - Prob. 15QPCh. 20 - Prob. 16QPCh. 20 - Prob. 17QPCh. 20 - Prob. 18QPCh. 20 - Prob. 19QPCh. 20 - Prob. 20QPCh. 20 - Prob. 21QPCh. 20 - Prob. 22QPCh. 20 - Credit Policy at Howlett Industries Sterling...Ch. 20 - Prob. 2M
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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
- What is the economic order size? (EOQ)Additionally, find the Total cost, Average Inventory, and Order frequencyarrow_forward1. Calculating Costs and Break-Even [LO3] Night Shades, Inc. (NSI), manufactures biotech sunglasses. The variable materials cost is $11.13 per unit, and the variable labor cost is $7.29 per unit. a. What is the variable cost per unit? b. Suppose the company incurs fixed costs of $875,000 during a year in which total production is 190,000 units. What are the total costs for the year? c. If the selling price is $44.99 per unit, does the company break even on a cash basis? If depreciation is $435,000 per year, what is the accounting break-even point?arrow_forwardExercise 6 Bruce Co. has 4500 units in inventory. It made the product last year at a cost of $54 each. This year's model is much better and the 4500 units can't be sold at last year's regular price. Bruce Co. has two alternatives. It could sell the inventory to a wholesaler for $45 each or it could rework the inventory at a cost of $27900 and then sell them for $63 each. What is the financial impact of reworking the units? Should Bruce sell now or rework? Reworkarrow_forward
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