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Barneycle's Boat Shop, Neat-O-Widgets: optimum order quantity and AR disount

Barneycle's Boat Shop sells 3000 of its glow-in-the-dark boats each year and has fixed order costs of $120 per order. Carrying cost per boat is $150 per year. What is the optimal order quantity for these boats?

a. 69
b. 87
c. 98
d. 133
e. 1200

Neat-O-Widgets (NOW) must decide whether changing its credit policy from net 30 to 2 / 10 net 30 would be beneficial. The cash discount should increase sales from 1,900 to 2,000 units per year, and 64 percent of NOW's customers will likely take the discount. The bad debt percentage will not be altered. NOW sells each unit for $2,500, with a variable cost per unit of $2,170. NOW has calculated the cost savings from reduced investment in accounts receivable from the proposed discount to be $29,219. NOW should:

a. offer the discount as it results in a net profit of $34,781
b. offer the discount as it results in a net profit of $3,781
c. not offer the discount as it results in a net cost of $781
d. not offer the discount as it results in a net cost of $1,781
e. not offer the discount as it results in a net cost of $17,781

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Question 16
Barneycle's Boat Shop sells 3000 of its glow-in-the-dark boats each year and has fixed order costs of $120 per order. Carrying cost per boat is $150 per year. What is the optimal order quantity for these boats?

a. 69
b. 87
c. 98
d. 133
e. 1200

Optimal order quantity = square root of((2* annual demand* fixed order cost)/charring cost per boat per year)= square root ...

Solution Summary

The solution contains both a narrative explanation as well as the calculations in response to finance-related problems.

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