Answer: $3,019,838
Explanation:
Peyton will gain the cash from this transaction.
Peyton will also gain the mortgage that is assumed by the buyer because they are being freed from debt.
They will however incur the expense of the broker's commission and the points they have to pay for.
Amount Peyton will recognize:
= Cash received from sale + Peyton mortgage assumed by Buyer - Points Peyton pays for - Broker's commission
= 1,950,800 + 1,170,480 - 23,410 - 78,032
= $3,019,838
a company product sells for 170 and has variable cost of 50 associated with the product what is its contribution margin per unit ?
Answer:
Contribution margin per unit = 120 per unit
Explanation:
Given:
Sales price of a unit = 170
Variable cost per unit = 50
Find:
Contribution margin per unit
Computation:
Contribution margin per unit = Sales price of a unit - Variable cost per unit
Contribution margin per unit = 170 - 50
Contribution margin per unit = 120 per unit
Contribution margin ratio = [Contribution margin per unit / Sales price of a unit]100
Contribution margin ratio = [120 / 170]100
Contribution margin ratio = [0.7058]100
Contribution margin ratio = 70.58% (Approx.)
Sunland Corp. prepared the following reconciliation of income per books with income per tax return for the year ended December 31, 2021: Book income before income taxes $2760000 Add temporary difference Construction contract revenue which will reverse in 2022 246000 Deduct temporary difference Depreciation expense which will reverse in equal amounts in each of the next four years (974400) Taxable income $2031600 Sunland's effective income tax rate is 25% for 2021. What amount should Sunland report in its 2021 income statement as the current provision for income taxes
Answer:
the current provision for income tax is $507,900
Explanation:
The computation of the current provision for income tax is shown below:
= (Income before income tax + temporary difference - depreciation expense) × effective income tax rate
= ($2,760,000 + $246,000 - $974,400) × 0.25
= $507,900
Hence, the current provision for income tax is $507,900
The same would be considered and relevant
Consider a two-period resource allocation problem where the efficient allocation of the resource implies a market price of $10 in the first period. Assume in both periods the constant marginal extraction costs equal $2 and the social discount rate is 10%. The socially efficient undiscounted market price in the second period must be:
Answer:
$10.80
Explanation:
Given that:
A first-period efficient allocation cost = $10
The constant marginal extraction cost MEC for both periods = $2
The social discount rate (r) = 10%
∴
The efficient undiscounted market price for the 2nd period can be determined by using the formula:
[tex]P_1 - MEC_1 = \dfrac{P_2 -MEC_2}{1+r} \\ \\ \implies 10 -2 = \dfrac{P_2-2}{1+0.1} \\ \\ 8 = \dfrac{P_2-2}{1.1} \\ \\ P_2 -2 = 8 \times 1.1 \\ \\ P_2-2=8.8 \\ \\ P_2 = 8.8+2 \\ \\ \mathbf{P_2 = \$10.80}[/tex]
Webster Corporation's monthly projected general and administrative expenses include $4,500 administrative salaries, $1,900 of other cash administrative expenses, $2,100 of depreciation expense on the administrative equipment, and .5% monthly interest on an outstanding bank loan of $25,000. Compute the total budgeted general and administrative expenses budget per month.
Answer:
$8,500
Explanation:
Total budgeted general and administrative expenses are the compulsory daily cost expended to ensure that a company's operations is maintained irrespective of whether the company is making profit or not.
Examples of general and administrative expense includes rent, utility bill, insurance, depreciation of office furniture, insurance and wages etc.
Therefore,
Total budgeted general and administrative expenses budgeted per month = Administrative salaries + Other cash administrative expenses + Depreciation
= $4,500 + $1,900 + $2,100
= $8,500
Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences:
SITUATION 1 2
Taxable income $35,000 $75,000
Amounts at year-end:
Future deductible amounts 4,500 11,500
Future taxable amounts 0 4,500
Balances at beginning of year, dr (cr):
Deferred tax asset $1,000 $4,600
Deferred tax liability 0 1,000
The enacted tax rate is 40% for both situations.
Required: For each situation determine the:
SITUATION
1 2
a) Income tax payable currently.
b) Deferred tax asset - balance at year-end.
c) Deferred tax asset change dr or (cr) for the year.
d) Deferred tax liability - balance at year-end.
e) Deferred tax liability change dr or (cr) for the year.
f) Income tax expense for the year.
Answer:
SITUATION 1 2
a) Income tax payable currently. $14,000 $30,000
b) Deferred tax asset - balance at year-end. $1,800 $4,600
c) Deferred tax asset change dr or (cr) for the year. $800 $0
d) Deferred tax liability - balance at year-end. $0 -$1,800
e) Deferred tax liability change dr or (cr) for the year. $0 -$800
f) Income tax expense for the year. $13,200 $30,800
Explanation:
Note: See the attached excel file for all the calculations of all the answers a to f above.
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p o i n t s . y o u r we l c o m e
Answer:
THANKSSSSSSSSSSSSSSSSSSS SO MUCH
have a good day :)
Explanation:
Answer:
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Assume year 1 is 2019 and by the beginning of year 4, the Sanchezes have paid down the principal amount of the loan to $500,000. In year 4, they borrow an additional $100,000 through a loan secured by the home in order to finish their basement. The new loan carries a 7 percent interest rate and is termed a "home equity loan" by the lender. What amount of interest can the Sanchezes deduct on the $100,000 loan?
Answer: $7,000
Explanation:
Interest deduction is allowed by the IRS if the loan was taken to improve the home. However, for married couples, only loans below the $750,000 limit can have their interest deducted.
The Sanchezes have paid off $500,000 of the principal of their previous loan so we will assume that was enough to get this new loan under the $750,000 limit.
Allowable interest deduction will therefore be:
= 100,000 * 7%
= $7,000
what is the starting salary for a bookseller? it's for a project.
Answer:
$18k–36kper year
Explanation:
Is a business cycle a type of recession?
yes or no?
Answer:
The Answer is gonna be Yes
John is a math whiz who enjoys working hard. While he can collaborate, he prefers to work alone. Which of the following marketing careers would be the best fit for Johns skills.
A.Graphic Designer
B.Marketing research analyst
C.Public Relations Professional
D.Sales Representative
After analyzing the scenario, the best-fit marketing career for Johns's skills would be Marketing research analyst. Thus, option 'B' is the correct option.
What is a Marketing research analyst?Analysts of market research collect and examine consumer and competitor data. To determine the likelihood that a good or service will be purchased, market research experts examine customer preferences, economic conditions, and other variables. They assist businesses in determining who will buy certain things and at what price. If you enjoy working in a position that rewards analytical, collaborative, creative, and critical thinking abilities, a job in market research is a great fit.
Market researchers get to be at the cutting edge of business trends. Because they work set hours and get weekends off, many marketing analysts are able to maintain a healthy work-life balance. Due to the fact that most businesses require their services, they also frequently have good job security.
Learn more about Marketing research analysts, here:
https://brainly.com/question/13923577
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Match the cost variance component to its definition.
a. Actual quantity
b. Standard quantity
c. Actual price
d. Standard price
1. The expected price
2. The input used to manufacture the quantity of output
3. The amount paid to acquire input
4. The expected input for the quantity of output
Answer:
1. D
2. A
3. C
4. B
Explanation:
Price can be defined as the amount of money that is required to be paid by a buyer (customer) to a seller (producer) in order to acquire goods and services.
In sales and marketing, pricing of products is considered to be an essential element of a business firm's marketing mix because place, promotion and product largely depends on it.
In Accounting, costing is the measurement of the cost of production of goods and services by assessing the fixed costs and variable costs associated with each step of production.
The various types of cost variance components and their definition includes the following;
1. Standard price: the expected price
2. Actual quantity: the input used to manufacture the quantity of output
3. Actual price: the amount paid to acquire input
4. Standard quantity: the expected input for the quantity of output
Is debtors control a current asset, owners equity, income or current liability
Answer:
I need more explanations
Explanation:
what is the yearly salary or hourly wage of a librarian?
Answer
$23–43per hour
Librarian
United States
$34k–78kper year
Librarian
Chicago, IL
Explanation:
Looney Flanigan's weekly gross pay is 1250. each week she has $64.37 in deductions plus the state tax of 2% of her gross pay, social security taxes of 6.2% and Medicare taxes of 1.45%. what is her net pay?
Answer:
onnie Flanagan's weekly gross pay is $1,250. Each week she has $64.37 in deductions, plus state tax of three percent of her gross pay, and Social Security
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Choose a developing country that is starting to participate in global trade. Describe how economic concepts are affecting the lives of people in that country. Describe both the benefits and drawbacks of the country’s global trade activities.
Answer:
Amira, a sales rep for a software company, was asked by a potential customer whether the company’s technology could perform a specific function critical to his business needs. Amira wasn’t certain the software could handle his needs, so she told him she would need to get back to him. Rather than provide potential misinformation just to make the sale, Amira checked with the development team first. After determining the product could perform the requested function, she let her customer know. Not only did Amira earn the sale, but she earned trust and respect from her client, too.
Explanation:
In a workplace setting, acting with integrity often means demonstrating your core values in all efforts. Here are a few behaviors that show integrity: Being dependable and following through on commitments, Being open and honest when communicating with others, Holding yourself accountable and owning up to your shortcomings
Employees must exercise integrity regardless of their department or career level. Integrity is critical, however, in leadership positions where people have the opportunity to set examples for others. By incorporating strong values into your behavior, you can help encourage other employees to do the same.
How to display integrity in the workplace
Whether you’re working in a small business or a large corporation, your commitment to integrity will impact the workplace. Acting with integrity not only helps show employers you are capable of handling responsibilities that can advance your career, but it also helps foster a positive company culture.
Actions to demonstrate integrity and impact your workplace
1. Show up ready to work
2. Set a positive example
3. Be respectful during the conflict
4. Practice accountability
5. Follow and enforce company policies
6. Improve your work ethic
7. Respect property
Define the term Agriculture
Answer:
the science or practice of farming, including cultivation of the soil for the growing of crops and the rearing of animals to provide food, wool, and other products. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that enabled people to live in cities.
Explanation:
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Answer → Agriculture is the science or practice of farming, including cultivation of the soil for the growing of crops and the rearing of animals to provide food, wool, and other products.
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The following transactions and adjusting entries were completed by a paper-packaging company called Gravure Graphics International during 2018 and 2019. The company uses straight-line depreciation for trucks and other vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for patents.
January 2, 2015 Paid $86,000 cash to purchase storage shed components.
January 3, 2015 Paid $2,000 cash to have the storage shed erected. The storage
shed has an estimated life of 10 years and a residual value of
$5,000.
April 1, 2015 Paid $40,000 cash to purchase a pickup truck for use in the business.
The truck has an estimated useful life of five years and a residual
value of $3,000.
May 13, 2015 Paid $500 cash for repairs to the pickup truck.
July 1, 2015 Paid $29,000 cash to purchase patent rights on a new paper bag
manufacturing process. The patent is estimated to have a remaining
useful life of five years.
December 31, 2015 Recorded depreciation and amortization on the pickup truck,
storage shed, and patent.
June 30, 2016 Sold the pickup truck for $34,000 cash. (Record the depreciation
on the truck prior to recording its disposal.)
December 31, 2016 Recorded depreciation on the storage shed. Determined that
the patent was impaired and wrote off its remaining book value
(i.e., wrote down the book value to zero).
Record the journal entries for the following:
1. Record the purchase of storage shed components for $86,000.
2. Record the payment of $2,000 to have the storage shed erected
3. Record the purchase of a pickup truck for $40,000.
4. Record the repairs of $500 to the pickup truck.
5. Record the purchase of a patent for $29,000 on a new paper bag manufacturing process
6. Record the depreciation and amortization expense on the pickup truck, storage shed and patent for the year
7. Record the depreciation for the truck up to the date of sale.
8. Record the sale of the pickup truck for $34,000 cash.
9. Record the depreciation on the storage shed for the year.
10. Record any impairment loss incurred on the patent.
Answer:
See the attached excel file for the journal entries.
Explanation:
Note: See Sheet1 of the attached excel file for the journal entries for recording events 1 to 10 as well as the formulae in front of the ones that required calculations.
Note that the double-declining-balance depreciation for buildings is calculated for December 31, 2015 and December 31, 2016 as follows:
As form of definition, double-declining-balance is a depreciation method under which an asset is depreciated at twice the rate of the straight line depreciation method.
The depreciation rate for the building is therefore obtained as follows:
Straight line depreciation rate = 1 / Number of estimated life = 1 / 10 = 0.10, or 20%
Double-declining depreciation rate = Straight line depreciation rate * 2 = 10% * 2 = 20%
Total cost of building = $86,000 + $2,000 = $88,000
Depreciation expense on building on December 31, 2015 = Total cost of building * Double-declining depreciation rate = $88,000 * 20% = $17,600
Beginning value of Building on on January 1, 2016 = Total cost of building - Depreciation expense on building on December 31, 2015 = $88,000 - $17,600 = $70,400
Depreciation expense on building on December 31, 2016 = Beginning value of Building on on January 1, 2016 * Double-declining depreciation rate = $70,400 * 20% = $14,080
Additional Note:
See Sheet2 of the attached excel file for how the calculation of Building Depreciation Expenses Using Double-declining balance for the whole of estimated life of 10 years is done. Note that the $5,000 End year book value in Year 10 is the Salvage value and the Year 10 Accumulated depreciation is $83,000 which is the depreciable part of the $88,000.
Lastly, the Year 10 depreciation expense is calculated as follows:
Year 10 depreciation expense = Year 10 Beginning depeciable amount - Salvage value = $11,811 - $5,000 = $6,811
After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only individual voting for you. a.If the company has 430,000 shares outstanding and the stock currently sells for $45, how much will it cost you to buy a seat if the company uses straight voting
Answer:
$9,675,045
Explanation:
In order to win the election of the board of directors, voting powers should have half a of the voting power and one vote.
Calculating the cost incurred to buy the voting power:
Total cost = [Number of shares / 2 + 1] * Stock price
Total cost = [430,000/2 + 1] * $45
Total cost = 215,001 * $45
Total cost = $9,675,045
So, it will cost one $9,675,045 to buy a seat if the company uses straight voting.
Worldwide Electronics is a global manufacturing firm that produces televisions, monitors, and other consumer electronic equipment. It is organized geographically with four divisions (North America, South America, Europe and Africa, and Asia-Pacific). Manufacturing is organized by product line and shipped to the divisions. That is, televisions, for example, are produced in a single plant and then shipped to the four global divisions for sale.
Required:
Match the following executives to the responsibility center that best represents their likely decision-making authority. Responsibility Center Executive
1. JH Green, Corporate Personnel Officer
2. Kalya Borodina, Sales Manager, Peru
3. Jay Smith, Chief Executive Office
4. Andres Goya, Vice-President, South America S en Chan, Mexico City Plant Manager Cost center Discretionary cost center Investment center Profitcenter Revenue center
Answer:
Explanation:
1. JH Green, Corporate Personnel Officer - Discretionary cost center
2. Kalya Borodina, Sales Manager, Peru - Revenue center
3. Jay Smith, Chief Executive Office - Investment center
4. Andres Goya, Vice-President, South America - Profit center
5. Irene Chan, Mexico City Plant Manager - Cost center
2. How does the author analyze the social class relationship
Answer: A focus on objective tsocial class enters a direct determination of a person shotshell based on social economic variables mainly income wealth education occupation a second approach to social class the one that approach to social class that one that occupies here deals with how people put themselves into categories
Samtech Manufacturing purchased land and building for $3 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance$23,000 Legal fees for drawing the contract 8,500 Pro-rated property taxes for the period after acquisition 43,000 State transfer fees 4,700 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3 and $2 million, respectively. Shortly after acquisition, Samtech spent $89,000 to construct a parking lot and $47,000 for landscaping. Required:1. Determine the initial valuation of each asset Samtech acquired in these transactions.2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $320,000 and the salvaged materials were sold for $9,500. In addition, Samtech spent $86,000 clearing and grading the land in preparation for the construction of a new building.
Answer:
1. We have:
Initial valuation of land = $1,821,720
Initial valuation of building = $1,214,480
2. We have:
Initial valuation of land = $3,432,700
Initial valuation of building = $0
Explanation:
1. Determine the initial valuation of each asset Samtech acquired in these transactions.
Fair value of land = $3 million
Fair value of building = $2 million
Total fair value = $3 million + 2 million = $5 million
Total acquisition cost = Purchase price land and building + Title insurance + Legal fees for drawing the contract + State transfer fees = $3,000,000 + $23,000 + $8,500 + $4,700 = $3,036,200
Initial valuation of land = Total acquisition cost * (Fair value of land / Total fair value) = $3,036,200 * (3 / 5) = $1,821,720
Initial valuation of building = Total acquisition cost * (Fair value of building / Total fair value) = $3,036,200 * (2 / 5) = $1,214,480
2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $320,000 and the salvaged materials were sold for $9,500. In addition, Samtech spent $86,000 clearing and grading the land in preparation for the construction of a new building.
Since it is assumed that the building has been demolished, the building will no longer have any initial valuation or an initial valuation of $0.
What will happen now is that the Total acquisition cost plus Demolition costs and cost of clearing and grading the land in preparation for the construction of a new building minus the salvaged materials will be the initial valuation of land.
Initial valuation of land = Total acquisition cost + Demolition costs + Cost of clearing and grading the land - Salvaged materials = $3,036,200 + $320,000 + $86,000 - $9,500 = $3,432,700
Initial valuation of building = $0
Desert Company purchased land to be used as a factory site for $1,250,000. Desert paid $120,000 to tear down two buildings on the land. Salvage was sold for $8,000. Legal fees of $5,220 were paid for title investigation and making the land purchase. Architect’s fees were $46,800. Title insurance cost $3,600 and liability insurance during construction cost $3,900. Excavation cost $15,660. The contractor was paid $4,200,000. Landscaping cost $9,600. Interest costs during construction were $255,000.
The cost of the building that should be recorded by Wilson Co. is:_________
Answer:
$4,269,950
Explanation:
The Cost of an asset include Purchase Cost and other costs directly incurred to put the asset in the location and condition intended for use by management.
Calculation of Cost of the Building :
Architect’s fees $46,800
Insurance $3,600
liability insurance $3,900
Excavation $15,660
Contractor $4,200,000
Total $4,269,950
Therefore,
The cost of the building that should be recorded by Wilson Co. is $4,269,950
The following information is available for the pension plan of Concord Company for the year 2020.
Actual and expected return on plan assets $13,800
Benefits paid to retirees 38,400
Contributions (funding) 79,900
Interest/discount rate 10%
Prior service cost amortization 7,800
Projected benefit obligation, January 1, 2020 452,000
Service cost 54,700
Required:
Compute pension expense for the year 2020.
Answer:
$93,900
Explanation:
Computation for pension expense for the year 2020.
PENSION EXPENSE
Service cost $54,700
Interest cost $45,200
($452,000 * 0.10)
Less Actual return ($13,800)
Amortization of PSC $7,800
Pension expense $93,900
Therefore the pension expense for the year 2020 is $93,900
Perfectly competitive firms will: increase output up to the point that the marginal revenue of an additional unit of output is equal to the marginal cost. increase output up to the point that the marginal revenue of an additional unit of output is greater than the marginal cost. always attempt to minimize average variable cost. maximize total revenue by using the marginal decision rule.
Answer:
increase output up to the point that the marginal revenue of an additional unit of output is equal to the marginal cost.
Explanation:
In a perfect competition, there are many buyers and sellers of homogeneous products, and there is free entry and exit in the market.
This simply means that, in a perfectly competitive market, there are many buyers and sellers (price takers) of homogeneous products (standardized products with substitute) and the market is free (practically open) to all individuals or business entities that are willing to trade all their goods and services.
Generally, a perfectly competitive market is characterized by the following features;
1. Perfect information.
2. No barriers, it is typically free.
3. Equilibrium price and quantity.
4. Many buyers and sellers.
5. Homogeneous products.
Examples of a perfectly competitive market are the Agricultural sector, e-commerce and the foreign exchange market.
Perfectly competitive firms always strive to maximize profits by increasing their level of output, such that P = MC.
In a nutshell, in the long run equilibrium P = MR = MC.
Where;
P is the profit.
MR is the marginal revenue.
MC is the marginal cost.
List a minimum of sources of information in Australia that you could access to help you facilitate compliance with relevant international finance regulations.
Answer:
The answer is below
Explanation:
Some of the sources of information in Australia that you could access to help you facilitate compliance with relevant international finance regulations are:
1. Reserve Bank of Australia - RBA
2. Australian Prudential Regulation Authority - APRA
3. Australian Securities and Investments Commission - ASIC
4. Australian Competition and Consumer Commission - ACCC
5. Australian Communications and Media Authority - ACMA
6. Superannuation and Financial Services Industry - Royal Commission
7. Australian Financial Services Licence - AFSL
8. Australian Market Licence - AML
9. Clearing and Settlement - CS
10. Australian Consumer Law - ACL
In the short run or in shorter time periods supply curves tend to:_______
a) be perfectly elastic
b) be more inelastic than supply curves that apply to longer periods of time
c) be more elastic than supply curves that apply to longer periods of time
d) have a price elasticity of supply that's approximately equal to 1
Answer:
b) be more inelastic than supply curves that apply to longer periods of time.
Explanation:
In Economics, there are primarily two (2) factors which affect the availability and the price at which goods and services are sold or provided, these are demand and supply. In order to understand both short-run economic fluctuations and how the economy move from short to long run, we need the aggregate supply and aggregate demand model.
Aggregate supply (AS) refers to the total quantity of output (goods and services) that firms are willing to produce and sell at a given price in an economy at a particular period of time.
An aggregate supply curve gives the relationship between the aggregate price level for goods or services and the quantity of aggregate output supplied in an economy at a specific period of time.
In the short run or in shorter time periods supply curves tend to be more inelastic than supply curves that apply to longer periods of time.
This ultimately implies that, a rightward shift in the aggregate supply (AS) curve causes output to increase and result in a price fall (lower price), in the short run.
However, in the long-run or in longer time periods, supply curves tend to be fairly elastic than supply curves that apply to shorter periods of time.
Which of the following statements correctly explains Net present value: is the best method of analyzing mutually exclusive projects. is very similar in its methodology to the average accounting return. cannot be applied when comparing mutually exclusive projects. is less useful than the internal rate of return when comparing different-sized projects. is the easiest method of evaluation for nonfinancial managers.
Answer:
is the best method of analyzing mutually exclusive projects
Explanation:
The net present value would be considered the best method of capital budgeting to evaluate projects.
Also, it considers the time value of money. It represent to be a good indicator of firm profitability and rise the shareholder wealth.
So according to the given options, it would be considered the best method for analyzing the projects that are mutually exclusive
hence the first option is correct
what is a market failure
Imagine you are doing an inventory review for your new employer. One of the first items you look at is a cookware set. Demand is normally distributed with a mean of 17 units/day. The standard deviation for demand during lead time is 34.6. The company currently purchases the cookware set when the inventory level falls to 400. Supply lead time is 21 days.
Required:
a. How much safety stock is currently being held?
b. What Cycle Service Level is currently being supported?
c. If a 95% CSL is desired, what reorder point should be used?
d. If the annual holding cost is 20% of item cost and the item costs $12/unit, what is the cost of safety stock inventory based on a 95% CSL?
Answer: a. 43units
b. 89.5%
c. 414 units
d. $68.30
Explanation:
The information given are written below:
Demand, d = 17 units per day
Standard Deviation during lead time, SD = 34.6
Reorder point R = 400
Lead Time, L = 21 days
Since Reorder point = (d×L) + (Z×SD)
400 = (17 × 21) + (34.6 × Z)
400 = 357 + 34.6Z
34.6Z = 400 - 357
34.6Z = 43
Z = 43/34.6
Z = 1.24
a. How much safety stock is currently being held?
= 1.243 × 34.6
= 43 units
b. What Cycle Service Level is currently being supported?
Since the value of Z = 1.243, then, the service level from the service table will be: = 89.5%
c. If a 95% CSL is desired, what reorder point should be used?
This will be:
=(17 × 21) + (1.645 × 34.6)
= 357 + 56.917
= 413.917
= 414 units
d. If the annual holding cost is 20% of item cost and the item costs $12/unit, what is the cost of safety stock inventory based on a 95% CSL?
First, we need to know the average inventory for the 95% service level which will be:
= Safety stock / 2
= (1.645 × 34.6) / 2
= 28.46 units
The cost of safety stock inventory will be:
= Average inventory × Item cost × Holding cost
= 28.46 × 12 × 20%
= $68.30
Briefly discuss the advantages of place departmentalisation
Answer:
Places responsibility at a lower level Places emphasis on local markets and problems. Improves coordination in a region Takes advantage of the economics of local operations. Face-to-face communication with local interests.
