If average daily remittances are $1 million, and \"extended disbursement float\"

Question

If average daily remittances are $1 million, and "extended disbursement float" adds 10 days to the disbursement schedule, how much should the firm be willing to pay for a cash management system if the firm earns 11% on excess funds.

$0

$1,100,000

$1,110,000

$100,000

Price Corp. is considering selling to a group of new customers and creating new annual sales of $380,000. 4% will be uncollectible. The collection cost on these accounts is 5% of new sales, the cost of producing and selling is 82% of sales and the firm is in the 31% tax bracket. What is the profit on new sales?

$23,598

$29,966

$33,598

$311,600

Modos Company has deposited $4,090 in checks received from customers. It has written $1,510 in checks to its suppliers. The initial bank and book balance was $480. If $3,470 of its customer's checks have cleared but only $430 of its own, calculate its float.

$560

$460

$610

$1,050

Massa Machine Tool expects total sales of $11,000. The price per unit is $4. The firm estimates an ordering cost of $6.64 per order, with an inventory cost of $.56 per unit. What is the optimum order size? (Round your answer to the nearest whole number.)

153 units

102 units

255 units

128 units

Explanation / Answer

1.how much should the firm be willing to pay for a cash management system if the firm earns 11% on excess funds=$1,100,000

=$1 million*10 days*11%=$1,100,000

2.Profit on new sales=$23598

3. None of the option are correct . Right float is $620

Here is the calculation-

4.Optimum order size= 255 units

optimum order size( EOQ)= SQRT(2 × Annual demand × Cost Per Order / Carrying Cost per unit)

optimum order size( EOQ)= SQRT(2 × (11000/4)× 6.64 / 0.56) =255 units

Particulars Amount in $ Annual sales 380000 Less-   4% uncollectible 15200 5% collection costs 19000 Cost of producing and selling-82% 311600 Profit before taxes 34200 Less- Taxes of 31% 10602 Profit on new sales 23598

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