Question 5 (5 Mark):

A shipment of parts valued at $75,000 needs to be shipped from Tampa, FL, to Chicago, IL. They could be shipped by rail, taking 15 days at a cost of $1,575, or by truck, taking 4 days at a cost of $2,640. The annual holding cost rate for this type of item has been estimated at 22%. What option is more economical? Show your calculations.

Question 6 (2 marks):

Using Table 11.4, determine the sales necessary to equal a dollar of savings on purchases for a company that:

a) Has a net profit of 4% and spends 40% of its revenue on purchases.

b) Has a net profit of 6% and spends 80% of its revenue on purchases.

Question 7 (6 marks)

Answer Problem 11.11

Baker Mfg Inc. wishes to compare its inventory turnover to those of industrial leaders, who have turnover about 13 times per year and 8% of their assets invested in inventory.

Baker Mfg Inc

Net revenue $27,500

Cost of sales $21,500

Inventory $ 1,250

Total assets $16,600

a) What is Bakers inventory turnover?

b) What is Bakers percentage of assets committed to inventory?

c) How does Bakers performance compare to the industry leaders?

Question 8 (5 Marks):

Problem 12.1

L. Houts Plastics is a large manufacturer of injection-molded plastics in North Carolina. An investigation of the companys manufacturing facility in Charlotte yields the information presented in the table below. How would the plant classify these items according to an ABC classification system?