Q7: There are two retail stores both of them have sales of $ 200000 annually and annual cost of goods sold is $150000 in each of the stores. Labor and other expenses are $10000 annually in each of the two stores. The only difference between the two stores is that the normal inventory or stock of goods in Store A is $800000, while the normal inventory or stock of goods in store B is $400000. Estimate the difference in profitability of the two stores.

Q 8: A company manufactures TV sets at a cost of $300 each. After manufacturing it finds that it requires to maintain an average inventory of about 800 TV sets that are in either warehouses or in transit in transportation. Thereafter, when the sets are sold to retailers the terms of selling are payment may be made in 60 days. If production is 1000 TV sets in a month, estimate the additional interest costs because of holding inventories as well as extending credit in the market (with retailers making payments after two months in keeping with the terms of sale).

Rate of Interest: Where you may like to use a rate of interest or rate of discount use 10% as an annual rate of interest or discount.