Question 1: A firm annually sells 7,890 units. The cost of placing an order is $100 and the carrying costs are $2 a unit. What is the EOQ, the duration of the EOQ, and how many orders are placed annually? If the safety stock is 100 units, what are the maximum and average levels of inventory?
Question 2. Given the following information, complete the cash budget:
a. Collection occur one month after the sale
b. January’s credit sales were $80,000
c. The firm has a certificate of deposit for $40,000 that matures in April
d. Salaries are $145,000 a month
e. The monthly mortgage payment is $25,000
f. Monthly depreciation is $20,000
g. Property tax of $35,000 is due in February
February March April
Sales 150,000 200,000 250,000
Collections - - -
Other receipts - - -
Total cash receipts - - -
Salaries - - -
Other disbursements - - -
Total cash disbursements - - -
Net Change during the month - - -
Beginning the cash 30,000 - -
Ending Cash - - -
Required level of cash 10,000 10,000 10,000
Excess cash or (shortage) - - -