ToolMart is a small chain of stores catering to the do-it-yourself market with good- quality, well-priced...

 

Transcribed Image Text:

ToolMart is a small chain of stores catering to the do-it-yourself market with good- quality, well-priced tools for home repairs. ToolMart's sales are relatively stable at $1,250,000 with an average selling price of $50 and average cost of $11.50. The average cost to place an inventory order is $34 and the storage cost for its inventory is $10 per unit. Average days in inventory is 60. ToolMart's cost of capital is 12% and its tax rate is 28%. Required: a) If ToolMart orders 1,000 units per order, calculate the total annual after-tax order cost. (1 mark) b) Calculate the after-tax cost of holding a unit of inventory. (2 marks) c) Calculate the economic order quantity (EOQ). (2 marks) ett ena axe) gniniM Question 5 (2 marks) SXI 100 noitavainimbe XOS 11 s Zhang Industries buys the majority of its needs from Nguyen Wholesale Ltd. Nguyen offers terms of 2/20, net 60. Zhang can borrow at a rate of 8%. airt 10ay erit not est,8002 el xat emooni Required: B Ob vab no alnuosa Determine if Zhang should take the discount or pay in 60 days. mego to asilqu ToolMart is a small chain of stores catering to the do-it-yourself market with good- quality, well-priced tools for home repairs. ToolMart's sales are relatively stable at $1,250,000 with an average selling price of $50 and average cost of $11.50. The average cost to place an inventory order is $34 and the storage cost for its inventory is $10 per unit. Average days in inventory is 60. ToolMart's cost of capital is 12% and its tax rate is 28%. Required: a) If ToolMart orders 1,000 units per order, calculate the total annual after-tax order cost. (1 mark) b) Calculate the after-tax cost of holding a unit of inventory. (2 marks) c) Calculate the economic order quantity (EOQ). (2 marks) ett ena axe) gniniM Question 5 (2 marks) SXI 100 noitavainimbe XOS 11 s Zhang Industries buys the majority of its needs from Nguyen Wholesale Ltd. Nguyen offers terms of 2/20, net 60. Zhang can borrow at a rate of 8%. airt 10ay erit not est,8002 el xat emooni Required: B Ob vab no alnuosa Determine if Zhang should take the discount or pay in 60 days. mego to asilqu

Answer rating: 100% (QA)

a Total annual aftertax order cost Annual demand Order quantity Order cost 1 tax rate Annual demand ... View the full answer