Calculate the total annual cost of the inventory policy

Assignment Help Accounting Basics
Reference no: EM133070512

Question - PG has to decide whether to buy or produce your product. The demand is 40,000 units per year, the company can produce at a rate of 10,000 units per month, the cost of preparing each production run is $ 6,000, and the storage cost of one unit is $ 0.85 per month. Also consider that the cost of a unit is $ 1.5 dollars to produce, while buying it costs you $ 1.7 with an order cost of $ 1,500.

a) Should PG buy or sell?

b) Determine the optimal number of parts to be manufactured / purchased.

c) Calculate the total annual cost of the inventory policy for each case.

Reference no: EM133070512

Questions Cloud

Current fixed interest rate : You own a business and are considering an investment but there will be some environmental degradation. If you make the investment, it will pay £17165 annually a
How many additional labor hours are needed in may : Total enter a total dollar amount $45,600. Suppose the wage rate is $20 per hour. How many additional labor hours are needed in May
What is the monthly payment to the dealer : You are considering buying a car worth $20,000. The dealer, who is anxious to sell the car, offers you an attractive financing package. You have to make a downp
Determining the lower cost strategy : At-the-money European 5 month maturity call options on Telsa stock trade at $44.75. The current stock price is $295 and the continuous annual risk-free interest
Calculate the total annual cost of the inventory policy : The demand is 40,000 units per year, the company can produce at a rate of 10,000 units per month, Calculate the total annual cost of the inventory policy
Capital structure of two-thirds equity : You are building a free cash flow to the firm model. You expect sales to grow from $2 billion for the year that just ended to $4 billion five years from now.
Criminal justice and community justice : The purpose of this assignment is to understand the differences in Criminal Justice and community Justice.
Intergovernmental responses : Public education, emergenecy services; firefighters and paramedics are also free the same way health care can be free sometimes.
Real estate investment trusts : Real Estate Investment Trusts (REITs) are designed to deal in equities like improved income properties. The holdings of your selected REIT.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd