1. DD Food buys 50,000 boxed of ice cream cones every 2 months to service steady...

  

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1. DD Food buys 50,000 boxed of ice cream cones every 2 months to service steady demand for the product. Order cost are $100 per order, and carrying costs are $40 per box. Determine the economic order quantity. 2. To increase sales from their present annual $24 million, the company may try more liberal credit standards. Currently, the firm has an average collection period of 30 days. It believes that with increasingly liberal credit standards, the following will result: Credit Policy A Increase in sales from previous level (in millions) 3 Average collection period (days) 45 Bad debt (% of sales) 3 B 2 60 6 C D 1.5 6 90 150 10 15 The price of its products average $20 per unit, and variable costs average $18 per unit. If the company has a pretax opportunity cost of funds of 30%, which credit policy should be pursued? (Assume a 360-day year) 1. DD Food buys 50,000 boxed of ice cream cones every 2 months to service steady demand for the product. Order cost are $100 per order, and carrying costs are $40 per box. Determine the economic order quantity. 2. To increase sales from their present annual $24 million, the company may try more liberal credit standards. Currently, the firm has an average collection period of 30 days. It believes that with increasingly liberal credit standards, the following will result: Credit Policy A Increase in sales from previous level (in millions) 3 Average collection period (days) 45 Bad debt (% of sales) 3 B 2 60 6 C D 1.5 6 90 150 10 15 The price of its products average $20 per unit, and variable costs average $18 per unit. If the company has a pretax opportunity cost of funds of 30%, which credit policy should be pursued? (Assume a 360-day year)

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