Ray’s Satellite Emporium wishes to determine the optimal order size for its best-selling satellite dish (Model TS111). Ray has estimated the monthly demand for this model to be 230 units. This model costs Ray $396 to purchase from his supplier. His annual cost to carry inventory is 10% and he estimates that orders cost $38 to process. If Ray used an order quantity of 2000 instead of the optimal order quantity, how much money would he be wasting each year?

Answers

Answer 1
Answer:

Answer:

It waster $74,941.2‬ per year

Explanation:

The procedure is as follow:

  1. We calcualte the Economic order Quantity
  2. Then we calculatethe cost for EOQ and current order size
  3. compare to know the loss for inefficiency in inventory

1.- EOQ

Q_(opt) = \sqrt{(2DS)/(H)}

D = annual demand 230 units x 12 month = 2,760

S= setup cost = ordering cost = 38

H= Holding Cost= 10% of unit cost 39.60

Q_(opt) = \sqrt{(2*2760*38)/(39.6)}

EOQ = 72.78028371 = 73

2.-  Calculate Cost:

EOQ cost:

orders 2,760 / 73 = 37.80 = 38 order x $38 each = $1,444

holding cost: 73 x 39.6 = $2,890.8

Total: 1,444 + 2,890.8 = 4,334.8

Current Cost:

orders: 2,760 / 2,000 = 1.* = 2 order per year x $38 each = $76

holding cost: 2,000 x 39.6 = 79.200‬

Total 79,200 + 76 = 79,276

3.- Difference:

79,276 - 4,334.8 = 74,941.2‬


Related Questions

Caroline is working for a marketing firm making $60,000 per year but considers starting her own marketing company. Caroline has determined that to launch the business, she needs to invest $100,000 of her own funds. The annual cost of running the business will include $75,000 for the rent of the office space, $190,000 for employee wages, and $6,000 for materials and utilities. Caroline plans to manage the business, which means that she will have to quit her current job. Suppose that the interest rate (or rate of return) on investments in the economy is 6%.Caroline's total implicit cost per year is .
The manufacturing overhead budget at Rost Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 2,800 direct labor-hours will be required in September. The variable overhead rate is $7.00 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,120 per month, which includes depreciation of $3,640. All other fixed manufacturing overhead costs represent current cash flows. The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
Following is a recent BusinessSoftware Corp. press release: REDMOND, Wash.—March 16, 2016 — BusinessSoftware Corp. today announced that its board of directors have declared a quarterly dividend of $0.18 per share. The dividend will be payable on June 9, 2016, to shareholders of record on May 19, 2016. The ex-dividend date will be May 17, 2016 Prepare the journal entries BusinessSoftware Corp. used to record the declaration and payment of the cash dividend for its 8,600 million shares.
Imagine that you are holding 5,000 shares of stock, currently selling at $40 per share. You are ready to sell the shares but would prefer to put off the sale until next year for tax reasons. If you continue to hold the shares until January, however, you face the risk that the stock will drop in value before year-end. You decide to use a collar to limit downside risk without laying out a good deal of additional funds. January call options with a strike of $45 are selling at $2, and January puts with a strike price of $35 are selling at $3. 1. What will be the value of your portfolio in January (net of the proceeds from the options) if the stock price ends up at: (a) $30 (b) $40 (c) $50 2. Compare these proceeds to what you would realize if you simply continued to hold the shares.
Activities of a central motor pool that provides and services vehicles for the use of municipal employees on official business should be accounted for in a. General Fund. b. Enterprise Fund. c. Internal Service Fund. d. Special Revenue Fund.

CD is an all equity firm that has 10,000 shares of stock outstanding at a market price of $20 a share. The firm's management has decided to issue $50,000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 5 percent.a. What are the earnings per share at the break-even level of earnings before interest and taxes? Ignore taxes.

Answers

Answer:

EPS = $ 2.00

Explanation:

Earning per share:  EBIT/outstanding shares

unlevered firm EPS:

oustanding shares: 10,000

Levered firm EPS:

(EBIT - interest)/outstanding shares

where:

Interest_ 50,000 x 5% = 5,000

Shares repurchase: 50,000 / 20 = 2,500

Outstanding shares: 10,000 - 2,500 = 7,500

\left \{ {{EPS = EBIT/10,000} \atop {EPS = EBIT-5,000/7,500}} \right.

EBIT/10,000 = (EBIT-5,000)/7,500

(0.75)EBIT = EBIT - 5,000

5,000 / (1-0.75) = EBIT

EBIT = 20,000

EPS: 20,000 / 10,000 = 2.00

9. Suppose an investor has two choices:Choice 1: invest in a Bond A which is a 2-year bond with an interest rate of 12% Choice B: two 1-year bonds with sequential interest payment of 10% and 14%?Which Choice would produce a greater return if the pure expectations theory was to hold true. *A) Choice A
B) Choice B
C) Both of the choices would produce the same return
D) We can’t tell.

Answers

Answer:

the answer is (C) both of the choices would produce the same return

On June 10, Marin Company purchased $8,400 of merchandise from Cullumber Company, on account, terms 3/10, n/30. Marin pays the freight costs of $380 on June 11. Goods totaling $500 are returned to Cullumber for credit on June 12. On June 19, Marin Company pays Cullumber Company in full, less the purchase discount. Both companies use a perpetual inventory system.Prepare separate entries for each transaction on the books of Cullumber Company

Answers

Answer:

                                                       Debit            Credit

June 10   Accounts Receivables        $8400

               Merchandise                                        $8400

June 12    Merchandise                     $500

               Accounts Receivables                             $500

June 19    Cash                                  7663

               Discount                             237

               Accounts Receivables                            $7900

Explanation:

Final answer:

The transactions in Cullumber's books include sales revenue, accounts receivable, sales returns and allowances, and finally a cash entry alongside sales discounts when Marin pays the balance due.

Explanation:

The transactions on the books of Cullumber Company would be recorded as follows:

  1. On June 10, Marin Company purchases $8,400 worth of goods. In the books of Cullumber, this would be recorded as: Accounts Receivable - Marin Company $8,400andSales Revenue $8,400
  2. On June 11, Marin pays freight costs of $380. This has no effect on the entries in the books of Cullumber Company.
  3. On June 12, Goods totaling $500 are returned by Marin. This would be recorded as: Sales Returns and Allowances $500 and Accounts Receivable - Marin Company $500
  4. On June 19, Marin pays off the balance less the purchase discount. The payment can be recorded as: Cash $7,621, Sales Discounts $279 and Accounts Receivable – Marin Company $7,900. The sales discount is (3% of $8400-$500) = $279.

Learn more about Business Transactions here:

brainly.com/question/30265027

#SPJ3

Canada is currently the second largest producer of nickel in the world. The recent reopening of the world famous Voisey's Bay mine, which has total resources estimated at 124 million tons of nickel-bearing ore, should give Canada a clear:comparative advantage

Answers

Answer:

The correct answer is: comparative advantage.

Explanation:

In Business, comparative advantage is an advantage that a company has over its competitors. The strategy relies on the company being able to produce at a lower comparative cost. This is achieved by lowering production costs or by introducing more efficient manufacturing strategies.

In Canada's case, the reopening of Voisey's Bay mine implies an opportunity to lower the costs of the commercialization of nickel since there will be more of that resource available for extraction.

Final answer:

Canada, being a significant nickel producer with the reopening of Voisey's Bay mine, is said to have a comparative advantage. This term refers to a country's ability to produce goods at lower opportunity costs compared to others, which allows Canada to efficiently produce and export nickel.

Explanation:

Canada's position as the world's second-largest producer of nickel, paired with the reopening of the Voisey's Bay mine, equips Canada with what is known as a comparative advantage in the global nickel market. A comparative advantage refers to a country's ability to produce a certain good or service at lower opportunity cost than its trading partners. In this case, due to the vast resources of nickel-bearing ore at Voisey's Bay, Canada has a cost advantage, which enables Canada to produce and export nickel more efficiently than other countries.

Learn more about Comparative Advantage here:

brainly.com/question/34399484

#SPJ3

Most states restrict the number of hospitals in a given geographic area under "Certificate of Need" (CON) laws. These laws require any new hospital facility to provide evidence that there is a demand for its facility that is not currently being met by the existing healthcare facilities in that geographic market. Identify the market inefficiency that these CON laws are trying to fix.

How does restricting the number of hospitals correct this inefficiency? Explain briefly.

Answers

Answer: The answer is provided below

Explanation:

The certificate of need, is a legal document in the United States that is required in many states and federal jurisdictions before proposed expansion, acquisitions, or the creations of healthcare facilities will be allowed.

a. The market inefficiencies which will be eliminated by the certificate of needs laws are that:

The absence of certificate of needs laws will have resulted in an unregulated market competition among the hospitals. This competition could result into medical providers over-investing in medical equipments and facilities. This will lead to an increase in the demand for the equipments which in turn, leads to rise in the equipments costs and the burden caused by the rise in price is shifted to the patients in form of high prices which could lead to exploitation.

b. Restricting the number of hospitals can correct this inefficiency because the laws will help reduce competition among the hospitals which will help reduce demand for healthcare equipments.

This will help in pushing the market toward equilibrium over time whereby healthcare delivery are more affordable to people.

Reid Company's balance in prepaid insurance at the beginning and end of the year was $1,000 and $1,200, respectively. This will be reported on the statement of cash flows using the indirect method as: Click the answer you think is right. a decrease of $200 which will be added to net income an increase of $200 which will be subtracted from net income an increase of $200 which will be added to net income a decrease of $200 which will be subtracted from net income Read about this Do you know the answer? Think so No idea I know it Unsure

Answers

Given that, Reid Company's balance in prepaid insurance at the beginning and end of the year was $1,000 and $1,200, respectively. Hence, by doing calculations, it is found out that the correct option is-

an increase of $200 which shall be subtracted from net income.

What is an increase in the prepaid expense account?

The gap between the opening and closing balances is reflected in the prepaid expense account as an increase.

What are prepaid expenses?

Prepaid expenses are asset accounts, and an increase implies that cash was spent on attaining the asset, so it is considered an application of cash and hence deducted from net income.

What is the definition of net income?

Net income is the amount of money left over after taxes as well as deductions are deducted from your paycheck. Net income is the money left over after paying operational expenses, administrative expenses, cost of products sold, taxes, insurance, and all other business expenses for a company.

Learn more about net income from

brainly.com/question/29989249

#SPJ4

Other Questions