Determine the anticipated loss to the firm

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1. Solly’s Appliances is considering selling a full set of kitchen appliances to Tshona Hospitality Group on credit. The cost is R250 000 and the selling price is R400 000. Credit terms of 2/15 net 60 were agreed upon.

The cost of capital to Solly’s Appliances is 12%.

Required:

1. Calculate the profit that Solly’s Appliances would make if the account is settled within 15 days.

2. Should the customer fail to pay the amount due and the account is written off after 90 days, determine the anticipated loss to the firm.

2. The annual sales of Enroch Limited is 1 600 000 units. The purchase price is R8 per unit. The carrying cost of inventory amounts to 25% of the purchase price. The ordering cost is R40 per order.

Required:

1. Calculate the EOQ.

2. Determine the number of orders that need to be placed each year.

3. Calculate the total cost of the order size and average inventory determined.

Reference no: EM132163087

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