The single order, 2.4 million parts, will require you to borrow the entire purchase price. You...

 

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The single order, 2.4 million parts, will require you to borrow the entire purchase price. You will need to pay your lender 6.125% annual interest. Assume a one-time payment of principle and interest at the end of 1 year (a note). • You will need to rent outside storage for the 2.4 million units. Givens: Each shipping carton contains 25 parts Each pallet of parts contains 40 cartons In and out handling charges = $8.80 per pallet Storage per month per pallet = $5.00 (not all pallets are stored for the entire 12 months; the inventory declines) Insurance on the parts inventory is $13,300 per year (fixed) Transportation charges from outside storage to your factory @ $66.00 per pallet (10,000 parts per day) • Your Accounting Department uses a factor of 1.5% of the value of the entire purchase as the damage/loss factor for the year. DKI Jul 2020 Questions to answer: 1. Using the given factors above, what are the annual additional costs incurred for purchasing and taking ownership of 2.4 million parts in one order? Interest on loan In and out handling Storage Insurance Transportation from outside storage to production facility Damage/loss factor Total Additional Cost S 2. What is the annual dollar amount of the discount being offered by your supplier? 3. After comparing the answers to #1 and #2, make your decision to either accept or reject the offer. Show your math 20 Points DKI Jul 2020 The single order, 2.4 million parts, will require you to borrow the entire purchase price. You will need to pay your lender 6.125% annual interest. Assume a one-time payment of principle and interest at the end of 1 year (a note). • You will need to rent outside storage for the 2.4 million units. Givens: Each shipping carton contains 25 parts Each pallet of parts contains 40 cartons In and out handling charges = $8.80 per pallet Storage per month per pallet = $5.00 (not all pallets are stored for the entire 12 months; the inventory declines) Insurance on the parts inventory is $13,300 per year (fixed) Transportation charges from outside storage to your factory @ $66.00 per pallet (10,000 parts per day) • Your Accounting Department uses a factor of 1.5% of the value of the entire purchase as the damage/loss factor for the year. DKI Jul 2020 Questions to answer: 1. Using the given factors above, what are the annual additional costs incurred for purchasing and taking ownership of 2.4 million parts in one order? Interest on loan In and out handling Storage Insurance Transportation from outside storage to production facility Damage/loss factor Total Additional Cost S 2. What is the annual dollar amount of the discount being offered by your supplier? 3. After comparing the answers to #1 and #2, make your decision to either accept or reject the offer. Show your math 20 Points DKI Jul 2020

Answer rating: 100% (QA)

Answer 1 The additional costs to be incurred are as follows Interest on Loan 203595 In and out handl... View the full answer