Question
REGORK, Inc. is headquartered in Cincinnati, OH and manufactures grocery store carts. The carts consist of cheap metal and plastic. The cheap metal comes from
REGORK, Inc. is headquartered in Cincinnati, OH and manufactures grocery store carts. The carts consist of cheap metal and plastic. The cheap metal comes from CHEAPO DEPOT and costs $100 per container. One container makes 2 shopping carts. The plastic comes from THINK PLASTICS and costs $50 per container. One container makes 4 shopping carts. It costs $10 per container of cheap metal to store, and $12 per container of plastic to store. Ordering costs for both are $12.50 per order. CHEAPO DEPOT offers the following to its customers: (1) if you purchase between 20 and 39 containers, then a 10% discount; (2) if you purchase between 40 and 59 containers, then a 20% discount; and (3) if you purchase more than 59 containers, then a 25% discount. THINK PLASTICS offers 20% off for purchases of 25 containers of more. REGORK, Inc expects to sell 50,000 shopping carts in the next year. In addition, to the cheap metal and plastic, the only other variable cost in the manufacturing process is employee wages, which are expected to total $100,000 next year. REGORK, Inc. sells its shopping carts to grocery stores with terms of N/45. The collection expenses for company are 3%, and assume that all of the customers pay by day 45. The WACC for the company is 12%. If the company wants to earn a net present value gross profit margin of 15% (Revenue (or sales)
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