The May-Bee Company distributes firefighting equipment. Approximately 50 percent of the company’s SKU are imported and the rest are acquired from domestic suppliers. Typically domestic orders have about 3 SKUs each and imported orders have about 5 SKUs each. May-Bee sales have been increasing at a steady rate and future trends appear very optimistic. The company relies on the bank for working capital. The owner, Mr. Brown, is experiencing some resistance from his banker in getting more cash to increase his investment in inventories to meet an anticipated increase in sales. Last year May Bee’s average inventory was around $1,000,000. He paid $52,000 interest on his bank loan, $80,000 rent for his warehouse, and $15,000 to insurance companies. The following table gives a summary of the costs involved in placing an order. These estimated were supplied by the persons involved, who guessed at the amount of time involved in each activity.

		time/order (min)	time/order (min)
hourly	rate$	domestic	imported
typist	20	20	40
inventory	30	20	30
reviever	12	30	60
bookkeeper	15	20	20
Mr brown	20	20	60

In addition, there was a charge of $30 per order, which represented the bank charge for the letter of credit for imported items, whereas the bank charges were only $5 per order for items acquired from domestic suppliers. a) This cost description was compiled by the bookkeeper. In your opinion, are there any costs that have been left out? Comment briefly. b) Compute May-Bee’s carrying cost (h) c) Compute the cost of placing an order for a single domestic and for a single imported SKU

On January 1, 2018, Savor Corporation leased equipment to Spree Company. The lease term is 9 years. The first payment of $698,000 was made on January 1, 2018. The present value of the lease payments is $4,561,300. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 9%, how much interest revenue will Savor record in 2018 on this lease?

Answer rating: 100% (QA)

answers a The costs that have been left out are as follows interest on bank loan for every single SK... View the full answer