Reference no: EM133176016
You operate a vehicle dealership that specializes in new car sales and occasionally takes trade-ins. The car dealership's inventory includes the following vehicle types:
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Vehicle Type
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Number of Vehicles
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Pick-up trucks
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210
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Sports cars
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600
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SUV
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500
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Four-door sedan
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100
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Van
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100
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SUVs and sports cars account for the majority of your sales. Because these cars have such large profit margins, you continue to stock mostly SUVs and Sports cars. The typical prices of your inventory are listed in the table below per kind.
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Vehicle Type
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Average Price
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Pick-up trucks
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$45,000
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Van
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$45,000
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Four-door sedan
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$25,000
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SUV
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$60,000
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Sports cars
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$90,000
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The first thing you do when you go to work in the morning is read the news. You like to remain up to date on the latest developments in consumer spending patterns as well as economic news.
There has been a lot of talk in recent weeks about the impending recession and economic downturn. You may recall from economics class that automakers are affected by economic downturns, and many experts believe we are entering the decline phase, which will result in a recession. You're unsure what should be done to keep things running smoothly or, in the worst-case scenario, to limit potential losses. As a result, you begin working on the following:
1. CLASSIFY THE CAR INVENTORY ACCORDING TO PRODUCT TYPE: "NORMAL GOOD, LUXURY GOOD, OR INFERIOR GOOD"
2. STATE THE RELATIONSHIP BETWEEN THE ECONOMIC CYCLE/ GOOD TYPE (NORMAL, LUXURY, OR INFERIOR), AND THE BUSINESS.
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Calculate the annual depreciation expense
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Operate a vehicle dealership
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