According to Philip Kilter, which class of customer produces low profit but is desirable?
Customer profitability lily analysis determines all revenues and all costs assignable to specific customers. Customers in the iron category produce low profits but are desirable. The firm's marketing investment in these customers is lower than for the platinum and gold categories. However, the firm's objective should be to move them into the gold category. .
The Summers Company manufactures a vanity of industrial valves. Current', the company is operating at about 70% capacity and is earning a satisfactory return on investment. Management has been approached by Glasgow Industries Ltd. of Scotland with an offer to buy 120.000 units of a pressure valve. Glascow manufactures a valve that is almost identical to Summers' pressure valve; however, a fire in Glascow Industries' valve plant has shut down its manufacturing operations. Glascow needs the 120,000 valves over the next 4 months to meet commitments to its regular customers; the company is prepared to pay $19 each for the valves. FOB shipping point. Summers' product cost, based on current attainable standards. for the pressure valve is
Manufacturing overhead is applied to production at the rate of $18 per standard direct labor hour This overhead rate is made up of the following components How many additional direct Labor hours would be required each month to fill the Glascow order?
The manufacturing overhead rate is $18 per standard direct labor hour and the standard product cost includes $9 of manufacturing overhead per pressure valve. Accordingly, the standard direct labor hour per finished valve is 112 hour ($9 / $18). Therefore, 30,000 units per month would require 15,000 direct labor hours.
A firm averages $4000 in sales per day and is paid, on an average1 within 30 days of the sale. After they receive their invoice, 55% of the customers pay by check, while the remaining 45% pay by credit card. Approximately how much would the company show in accounts receivable on its balance sheet on any given date?
If sales are $4000 per day, and customers pay in 30 days1 30 days of sales are outstanding, $120,000. Whether customers pay by credit card or cash, collection requires 30
A proposed investment is not expected to have any salvage value at the end of its 5-year life. Because of realistic depreciation practices, the net carrying amount and the salvage value are equal at the end of each year. For present value purposes, cash flows are assumed to occur at the end of each year. The company uses a 12% after-tax target rate of return.
Which statement about the internal rate of return of the investment is true?
The NPV method discounts the expected cash flows from a project using the required rate of return. A project is acceptable if its NPV is positive. Based on the interest factors for the present value of $1 at 12% and the annual after-tax cash flows, the NPV of the project over its 5-year life is
Given that the NPV is positive, the investment project should be accepted assuming no capital rationing. Furthermore, the IRR (the discount rate that reduces the NPV to $0) must be greater than the 12% hurdle rate that produced a positive NPV. The higher the discount rate, the lower the NPV.
The Stewart Co. uses the economic order quantity (EOQ) model for inventory management.A decrease in which one of the following variables would increase the EOQ?
The EOQ model minimizes the total of ordering and carrying costs. The EOQ is calculated as follows:
Increases in the numerator (demand or ordering costs) will increase the EOQI whereas decreases in demand or ordering costs will decrease the EOQ. Similarly, a decrease in the denominator (carrying costs) win II increase the EOQ.
