*The J&B Card Shop sells calendars featuring a different colonial picture for each month. The once-a-year order for each year’s calendar arrives in September. From past experience, the September-to-July demand for the calendars can be approximated by a normal distribution with μ=300μ=300 and standard deviation=20standard deviation=20 . The calendars cost $6.50 each, and J&B sells them for $15 each.
Suppose that J&B throws out all unsold calendars at the end of July. Using marginal economic analysis, how many calendars should be ordered?
If J&B sells surplus calendars for $1 at the end of July and can sell all of them at this price, how many calendars should be ordered?
Cs = Cost of shortage = selling price - cost = 15-6.5 = 8.5
Co = Cost of overage = cost - salvage value = 6.5-0 =6.5
Critical ratio = Cs/ Co+Cs = 8.5 /8.5+6.5 =8.5 /15 = 0.566
The corresponding z value = 0.17
Optimum value of order = mu + SD xz
=300+20x0.17 =303.4 =303
If the salvage value becomes 1, then the Co will be 6.5-1 =5.5
critical ratio will become = 8.5 / 8.5+5.5 = 8.5/14 =0.6071
which corresponds to a z value of 0.27
New value of optimum order = 300+20x0.27 = 305.4 =305
*The J&B Card Shop sells calendars featuring a different colonial picture for each month. The once-a-year...
The accountant for Baird’s Dress Shop prepared the following cash budget. Baird’s desires to maintain a cash cushion of $24,000 at the end of each month. Funds are assumed to be borrowed and repaid on the last day of each month. Interest is charged at the rate of 1 percent per month. Required Complete the cash budget by filling in the missing amounts. Determine the amount of net cash flows from operating activities Baird’s will report on the third quarter...