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An air cargo company must decide how to sell its capacity. It could sell a portion of its capacity with long-term contracts. A long-term contract specifies that the buyer (the air cargo company's customer) will purchase a certain amount of cargo space at a certain price. The long-term contract rate is currently $1,700 per standard unit of space. If long-term contracts are not signed, then the company can sell its space on the spot market. The spot market price is volatile, but the expected future spot price is around $2,075. In addition, spot market demand is volatile: Sometimes the company can find customers; other times it cannot on a short-term basis. Let's consider a specific flight on a specific date. The company's capacity is 52 units. Furthermore, the company expects that spot market demand is normally distributed with a mean of 64 and a standard deviation of 42. On average, it costs the company $200 in fuel, handling, and maintenance to fly a unit of cargo.
Suppose the company is willing to use both the long-term and the spot markets. How many units of capacity should the company sell with long-term contracts to maximize revenue? (Round your answer to 2 decimal places.)
Suppose the company is willing to use both the long-term and the spot markets. How many units of capacity should the company sell with long-term contracts to maximize profit? (Round your answer to 2 decimal places.)
Allowance for Uncollectible Accounts at the beginning of its 2012 fiscal year. The firm did not make any adjusting entries to record uncollectible accounts expense during the year.
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Review the opening feature of this chapter that highlights Dylan Lauren and her company Dylans Candy Bar.
Find total costs including interest at 5% on the capital cost of the machine. (Depreciation to be calculated at 10% on straight line method)
Compute ending inventory and cost of goods sold under FIFO, LIFO, and average cost inventory costing methods.
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Why must costs be allocated? Explain why overhead costs, support department costs, or joint costs must be allocated to products
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