Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PA 13-8 (Algo) Geoff Gullo owns a small firm that manufactures... Geoff Gullo owns a small firm that manufactures Gullo Sunglasses. He has the opportunity

image text in transcribed
image text in transcribed
PA 13-8 (Algo) Geoff Gullo owns a small firm that manufactures... Geoff Gullo owns a small firm that manufactures "Gullo Sunglasses". He has the opportunity to sell a particular seasonal model to Land's Start, a catalog retailer. Geoff offers Land's Start two purchasing options. Use Table 13.4. - Option 1: Geoff offers to set his price at $61 and agrees to credit Land's Start $55 for each unit Land's Start returns to Geoff at the end of the season (because those units did not seli). Because styles change each year, there is essentially no value in the returned merchandise. - Option 2: Geoff offers a price of $51 for each unit, but returns are no longer accepted. In this case, Land's Start throws out unsold units at the end of the season. This season's demand for this model will be normally distributed with a mean of 150 and a standard deviation of 100. Land's Start will sell those sunglasses for $100 each. Geoff's unit production cost is $22. Note: If a part of the question specifies whether to use Table 13.4, or to use Excel, then credit for a correct answer will depend on using the specified method. a. How much would Land's Start buy if it chose option 1? Use Table 13.4 and round-up rule. Note: Round your answer up to a whole number. b. How much would Land's Start buy if it chose option 2? Use Table 13.4 and round-up rule. Note: Round your answer up to a whole number. c. Use Table 13.4. Which option will Land's Start choose? Complete the table below: Note: Use your rounded order quantities from Parts a \& b. Round your "Expected Inventory and Expected Sales" to 2 decimal places. d. Suppose Land's Start chooses option 1 and orders 325 units. What is Geoff Gullo's expected profit? Use Table 13.4 and the round-up rule. Note: Do not round intermediate calculations. Round your answer up to a whole number

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Loose Leaf For Financial Accounting Fundamentals

Authors: John Wild, Ken Shaw, Barbara Chiappetta

6th Edition

1260151980, 978-1260151985

More Books

Students also viewed these Accounting questions