Reference no: EM132690792
Problem - Just-in-time principles - David Harrelson Motorcycle Company manufactures a variety of motorcycles. Harrelson's purchasing policy requires that the purchasing agents place each quarter's purchasing requirements out for bid. This is because the Purchasing Department is evaluated solely by its ability to get the lowest purchase prices. The lowest cost bidder receives the order for the next quarter (90 days). To make its motorcycles, Harrelson requires 3,600 frames per quarter. Harrelson received two frame bids for the third quarter, as follows:
Famous Frames, Inc.: $322 per frame. Delivery schedule: 40 frames per working day (90 days in the quarter).
Iron Horse Frames Inc.: $320 per frame. Delivery schedule: 3,600 (40 frames × 90 days) frames at the beginning of July to last for three months.
Harrelson accepted Iron Horse Frames Inc.'s bid because it was the low-cost bid.
Instructions -
1. Comment on Harrelson's purchasing policy.
2. What are the additional (hidden) costs, beyond price, of Iron Horse Frames Inc.'s bid? Why weren't these costs considered?
3. Considering just inventory financing costs, what is the additional cost per frame of Iron Horse Frames Inc.'s bid if the cost of money is 8%? (Hint: Determine the average value of frame inventory held for the quarter and multiply by the quarterly interest charge, then divide by the number of frames.)
|
What is the cash balance per ledger on december
: What is the cash balance per ledger on December 31? In addition, the entity discovered that it had drawn and erroneously recorded a check for P46,000
|
|
Journalize the adjusting entries at December
: Adjusting and reversing entries - On the basis of the following data, (a) journalize the adjusting entries at December 31, the end of the current fiscal year
|
|
What is the carrying amount of the note receivable
: On December 31, 2019, Soo Company sold used equipment, What is the carrying amount of the note receivable on December 31, 2019?
|
|
What amount of petty cash fund should be reported
: Gasoline payments for delivery equipment 3,000. What amount of petty cash fund should be reported in the statement of financial position?
|
|
Comment on Harrelson purchasing policy
: What are the additional (hidden) costs, beyond price, of Iron Horse Frames Inc.'s bid? Comment on Harrelson purchasing policy
|
|
Explain instances when liquidation value should be used
: Explain instances when liquidation value should be used in valuation and why it should be used over going concern valuation techniques.
|
|
Which company have the control power of c
: B bhd will manufacture and marketing the product. Which company have the control power of C and how to determine whether the company have control power or not?
|
|
How does the accounting in a JIT environment
: Conversion costs were applied for 7,000 units of production in March. How does the accounting in a JIT environment differ from traditional accounting
|
|
Develop a financial model using electronic or manual
: Secure an audited financial statement of a Philippine Listed company. Develop a financial model using electronic or manual spreadsheet
|