May Motz is the editor-in-chief of her schools yearbook. The school has 1,000 students and 60 faculty
Question:
May Motz is the editor-in-chief of her school’s yearbook. The school has 1,000 students and 60 faculty and staff members. The firm engaged to print copies of the yearbook charges the school $13 per book and requires a 10-day lead time for delivery. May and her editors plan to order 800 copies to sell at the school fair for $20 each.
Required
a. If the school sells 700 yearbooks, what amount of profit will it earn? What is the cost of waste due to excess inventory?
b. If 150 buyers are turned away after all yearbooks have been sold, what amount of profit will the school earn? What amount of opportunity cost will the school incur?
c. How could May use a JIT inventory system to maximize profits by eliminating waste and opportunity cost?
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...
Step by Step Answer:
a Income Statement Sales revenue 20 x 700 14000 Cost of goods sold 13 x 700 9100 Gross m...View the full answer
Fundamental Managerial Accounting Concepts
ISBN: 978-0078110894
6th Edition
Authors: Edmonds, Tsay, olds
