Please Answer all parts NEedUS Pharmaceuticals is exploring options for shipping a $9.5 million dollar machine...
Please Answer all parts
NEedUS Pharmaceuticals is exploring options for shipping a $9.5 million dollar machine to its main plant. Holding cost is high for this type of machinery because of opportunity costs. The machine is not available for production while in transit resulting in lost revenue from a highly profitable drug. The annual holding cost is 40%. Options are: A, 40 day transit costing 95,000, B. 25 day transit costing 160,000, and C, 15 day transit costing 280,000.
a. What is the total cost for shipping option A?
b. What is the total cost for shipping option B?
c. What reduction in direct transit cost is required to make shipping option C equal to the lowest cost option?
Homework Answers
Holding cost per day = 9,500,000 X 40% / 365 = 10,410.96
a
Total cost = Shipping cost + holding cost = 95,000 + 10,410.96 X 40 = 511,438.4
b
Total cost = 160,000 + 10,410.96 X 25 = 420,274
c
Reduction c total cost = 280,000 + 10,410.96 X 15 = 436,164.4
Reduction required to make it lower cost than option b = 436,164.4 - 420,274 = 15,890.4
Reduction required is15,890.4
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Please Answer all parts
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of industry leaders, who have turnover of about
1313
times per year and
88 %
of their assets invested in inventory.
Baker Mfg. Inc.
Net Revenue
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Cost of sales
$19 comma 41019,410
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