A company is examining two alternative choices for moving goods from its plant in Abu Dhabi...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A company is examining two alternative choices for moving goods from its plant in Abu Dhabi to its depot in Fujairah. It has been traditionally shipping goods in full truck load (FLT) mode so as to save on transportation costs. Its finance department has been complaining about high inventories in Fujairah. A full truck load results in a shipment size of 160 units, where less than truckload (LTL) allow the firm to get lots of 40 units each. The average demand un Fujairah depot is 80 units per month. The cost of product is 500 AED per unit and the firm works with annual inventory carrying cost 20 %. Shipping through FLT results in transport cost of 40 AED/unit, while LTL mode shipment costs 48 AED/unit in transport cost. Assuming that there is no holding cost on in-transit inventory, answer the following questions: 1. Should the company shift to LTL shipments? 2. Currently, the firm is going through serious working capital problems and the finance department has marking that inventory will be charged at an inventory inform carrying cost of 30%. How will this affect the transportation mode decision? A company is examining two alternative choices for moving goods from its plant in Abu Dhabi to its depot in Fujairah. It has been traditionally shipping goods in full truck load (FLT) mode so as to save on transportation costs. Its finance department has been complaining about high inventories in Fujairah. A full truck load results in a shipment size of 160 units, where less than truckload (LTL) allow the firm to get lots of 40 units each. The average demand un Fujairah depot is 80 units per month. The cost of product is 500 AED per unit and the firm works with annual inventory carrying cost 20 %. Shipping through FLT results in transport cost of 40 AED/unit, while LTL mode shipment costs 48 AED/unit in transport cost. Assuming that there is no holding cost on in-transit inventory, answer the following questions: 1. Should the company shift to LTL shipments? 2. Currently, the firm is going through serious working capital problems and the finance department has marking that inventory will be charged at an inventory inform carrying cost of 30%. How will this affect the transportation mode decision?
Expert Answer:
Answer rating: 100% (QA)
1 The carrying cost per unit per annum will be 100 AED 500 AED20 In case of FLT 160 units will be or... View the full answer
Related Book For
Engineering Economic Analysis
ISBN: 9780195168075
9th edition
Authors: Donald Newnan, Ted Eschanbach, Jerome Lavelle
Posted Date:
Students also viewed these accounting questions
-
A company is examining two mutually exclusive projects. Project X requires an immediate investment of $100,000 and produces no profit until Year 3. Then the annual profit is $60,000 for Years 3 to 5...
-
A company is examining two mutually exclusive projects. Project P requires an immediate investment of $225,000 and produces no profit until the fourth year. Then the expected annual profit is...
-
Assuming that there are no corporate income taxes, how can the costs of preferred stock and debt be estimated?
-
Use the limit definition of the definite integral with right Riemann sums and a regular partion to evaluate the following definite integrals. Use the Fundamental Theorem of Calculus to check your...
-
(10%) The cost per equivalent units of direct materials and conversion in the Bottling Department of Beverages on Jolt Company is $.47 and $.15, respectively. The equivalent units to be assigned...
-
What are the main factors that cause projects to fail? What are the main factors that enable projects to succeed?
-
Identifying errors in accounting for materials Ristlott Company is a small manufactur- ing company using a perpetual inventory system. Recently the company hired an accountant who has not worked for...
-
The chief cost accountant for Sassy Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning June 1 would be $ 97,500, and total direct...
-
Case 4A: Palm IPO: Write a short report (not more than 5 pages, double-spaced), developed around the following: Explain whether any of the three IPO phenomena (hot issue market, initial underpricing,...
-
Tonys Precision Computer Centre is picking up in business, so he has decided to expand his bookkeeping system to a general journal/ledger system. The balances from June have been forwarded to the...
-
(Quiz: 08.06b Probability Test + structure.com/courses/8016/quizzes/267258/take You are challenged to a lucky draw game. If you draw a 2 or 3 card from a standard deck of cards, you earn 6 points. If...
-
"Is tourism all about the egoistic satisfaction of those paying for the privilege or should ethics play a part? What does it mean to say that a certain way of behaving, or a particular kind of...
-
If you are a new sales manager, what possible problems and challenges will you possibly encounter if you are tasked to handle two teams at once? Provide examples. 1.b) describe how you will manage...
-
Database schema below shows the relations involved in Maju Holdings system. PARTICIPANTS EVENTS ATTENDANCE STAFFS LOCATIONS TASKS (PARTID, PARTNAME, PARTPHONE, PARTEMAIL, PARTADDRESS, PARTJOB)...
-
Name a brand or organization that performs exceptionally well, in your view, with regard to the Six Pillars of customer experience. Of the six, which pillar is the brand's/organization's strongest?
-
In the world of correctional administration, maintaining discipline and order is of paramount importance. One of the key tools at our disposal is the concept of progressive discipline for employee...
-
[A/An] _____ is an intervention between conflicting parties to promote reconciliation, settlement, or compromise. Question 3 options: ?mediation ?arbitration ?litigation ?mini trial ?rent-a
-
a) Calculate the goodwill that was paid by Major Ltd on the acquisition of Minor Ltd. [10 marks] b) Prepare the consolidated statement of financial position for Major Ltd at 31 July 20X8. [30 marks]...
-
From the following data, taken from the balance sheet of Petey's Widget Factory, determine the working capital, current ratio, and acid-test ratio. Cash...
-
Pete Sampras borrows $10,000 to purchase a car. He must repay the loan in 48 equal end-of-period monthly payments. Interest is calculated at 1.25% per month. Determine the following: (a) The nominal...
-
For the following diagram, compute the rate of return. A= 1000 412 5000
-
Interpret favorable variance (Learning Objective 5) Exhibit 10-20 shows that the Mexican sauces product line had a favorable marketing expense variance. Does this favorable variance necessarily mean...
-
Prepare inventory, purchases, and cost of goods sold budget (Learning Objective 2) Leno sells tire rims. Its sales budget for the nine months ended September 30 follows: In the past, cost of goods...
-
Prepare summary performance report (Learning Objective 1) Hanna White owns a chain of travel goods stores. Last year, her sales staff sold 10,000 suitcases at an average sales price of $150. Variable...
Study smarter with the SolutionInn App