Brown crop sells TV products. In order to attract more consumers, Brown corp offers 1 unit of bag which can be exchanged for 10 coupons. Each bag is accompanied by 1 coupon sheet. The company estimates that customers will redeem 80% of the outstanding coupons. During 19x5 Brown Corp. has achieved sales of 600,000 TVs at a selling price of 500,000/unit and purchased 100,000 units of bags as inventory at a cost of $62,500/unit. During the offer period, 165,000 coupons were exchanged for bags by customers. Prepare: 1. Journal of recording purchases of bags 2. Sales recording journal 3. Journal of coupon redemption by customer 4. The adjusting entry to recognize the liability at 31 December 19x5

Brown crop sells TV products. In order to attract more consumers, Brown corp offers 1 unit of bag which can be exchanged for 10 coupons. Each bag is accompanied by 1 coupon sheet. The company estimates that customers will redeem 80% of the outstanding coupons. During 19x5 Brown Corp. has achieved sales of 600,000 TVs at a selling price of 500,000/unit and purchased 100,000 units of bags as inventory at a cost of $62,500/unit. During the offer period, 165,000 coupons were exchanged for bags by customers. Prepare: 1. Journal of recording purchases of bags 2. Sales recording journal 3. Journal of coupon redemption by customer 4. The adjusting entry to recognize the liability at 31 December 19x5

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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On 2009, Jhet Enterprises sold 485,000 boxes of cereals under a promotional program. Each box contains one coupon, which entitles the buyer to a premium that cost the company ₱75. Five coupons plus a remittance of ₱20 must be presented by the buyer to receive a premium. Jhet Enterprises estimated that 85% of the coupons will be redeemed. Actual premiums redeemed were 5,000 units. Additional info revealed that ₱10 per premium is incurred for storage and distribution. Required: Compute for the liability for the unredeemed coupons.
Big Toy, Inc. annually sells 115,000 units of Big Blobs. Currently, inventory is financed through the use of commercial bank loans. Big Toy pays $11.80 per Big Blob. The cost of carrying this inventory is $3.40 per unit while the cost of placing an order involves expenses of $500 per order. Since Big Blobs are imported, delivery is generally 25 days but may be as long as 30 days. To manage inventory more efficiently, the management of Big Toy, Inc. has decided to use the EOQ model plus a safety stock to determine inventory levels. What is the economic order quantity? Round your answer to the nearest whole number. units Today is January 1 and the current level of inventory is 11,500 units; when should the first order be placed based on the economic order quantity? Assume 365 days in a year. Round your answer to the nearest whole number. The first order based on the EOQ model would be placed on the th day. Management always wants sufficient Big Blobs so that they never are out…
Inc. expects to use 48,000 boxes of chocolate per year costing P12 per box. Inventory carrying cost is equal to 20% of the purchase price. The company uses its inventory at a constant rate. The lead time for placing the order is 3 days, and corporation holds 2,400 boxes of paint as safety stock. If the company orders 2,000 boxes of chocolate per order, what is the cost of carrying inventory?
In an effort to increase sales, Alabama Company inaugurated a sales promotional campaign on June 30, 2022. The company placed a coupon redeemable for a plushy in each package of cereal sold. To receive a premium, a customer must present five (5) coupons. Each plushy cost the firm P20, while it can be sold by Alabama for P50 each. The company estimates that only 45% of the coupons issued will not be redeemed. For the six months ended December 31, 2022, the following information are available: Packages of cereal sold 170,000 Selling price per box of cereal P100 Plushies purchased 25,000 Coupons actually redeemed 80,000 (a) How much is the premium expense for the year ended December 31, 2022? (b) How much is the estimated liability for premium claims as of December 31, 2022? (c) How much is the inventory of premium items as of December 31, 2022?
The Ri Jung Hyuk Company sold 1,500,000 boxes of cake mix during the year under a new sales promotion program. Each box contains one coupon that, submitted with P40.00 entitles the customer to a baking pan. The Ri Jung Hyuk pays P50.00 per pan. The entity treated the premiums as selling expense. The company estimates that 80% of the coupons will be redeemed even though only 900,000 coupons had been processed during the year. What amount should Ri Jung Hyuk report as a liability for unredeemed coupons at year end?
Edwards Co. includes one coupon in each bag of dogfood it sells. In return for four coupons, customers receive a dogtoy that the company purchases for $1.20 each. Edward’s experienceindicates that 60% of the coupons will be redeemed. During 2010,100,000 bags of dog food were sold, 12,000 toys were purchased, and40,000 coupons were redeemed. During 2011, 120,000 bags of dog foodwere sold, 16,000 toys were purchased, and 60,000 coupons wereredeemed. Instructions: Determine the premium expense to bereported in the income statement and the estimated liability forpremiums on the balance sheet for 2010 and 2011.
Bulldogs Inc. expects to use 48,000 boxes of chocolate per year costing P12 per box. Inventory carrying cost is equal to 20% of the purchase price. The company uses its inventory at a constant rate. The lead time for placing the order is 3 days, and Bulldogs Co. holds 2,400 boxes of paint as safety stock. If the company orders 2,000 boxes of chocolate per order, what is the cost of carrying inventory? P2,400 P5,280 P8,160 P5,760
Bulldogs Inc. expects to use 48,000 boxes of chocolate per year costing P12 per box. Inventory carrying cost is equal to 20% of the purchase price. The company uses its inventory at a constant rate. The lead time for placing the order is 3 days, and Bulldogs Co. holds 2,400 boxes of paint as safety stock. If the company orders 2,000 boxes of chocolate per order, what is the cost of carrying inventory? Bulldogs Inc. currently fills mail orders from all over the country and receipts were received in its head office. The company’s average accounts receivable is P3,125,000 and is financed by a bank loan with 10% interest. Bulldogs is considering a regional lockbox system to speed up collections. This system is projected to reduce the average accounts receivable by 15%. The annual cost of the lockbox system is P25,000. What is the estimated net annual savings in implementing the lockbox system?
Suppose Stanley's Office Supply purchases 50,000 boxes of pens every year. Ordering costs are $100 per order, carrying costs are 5% of the inventory value, and the price is of $2.00 per box. The vendor now offers a quantity discount of 1% per box if the company buys pens in order sizes of 20,000 boxes. Should the company accept the quantity discount? Show your calculations to justify your decision.
Green Lantern, a pub & grill estimates that it will sell 10 000 beers per year which it will purchase from a distributor in Luanshya. A beer costs K18.00 to purchase and K2.00 in freight charges each. The company borrows funds at 9 % interest rate to finance inventories. Green Lantern’s purchasing agent has calculated that it costs K50.00 to place an order for beers and that the handling is K3.00 for each beer.1. What is the financial consequence if only 7 orders are placed for the year instead of ordering at the EOQ level?2. What is the cost of money called3. What is the process costing system
A retailing company believes it can sell 4 million of its main product within the upcoming financial year. The inventory manager plans to order its main product forty times over the next year. The carrying cost is $0.03 per product per year. The order cost is $600 per order. Calculate the following: i) The annual carrying costs ECM Manufacturing Company Limited has three (3) possible suppliers, all of which offer different credit terms. Apart from the slight differences in credit terms, their products and services are virtually identical. The credit terms offered by these suppliers are shown in table shown on the next page. Supplier Credit Terms Supplier 1 1/10 net 30 EOM Supplier 2 2/20 net 75 EOM Supplier 3 3/10 net 50 EOM Assuming a 365-day year, answer the following. d. What impact, if any, will “stretching” the accounts payable (net period only) of supplier 3 by 30 days, have on your answer to part b with regards to supplier 3. Ans…
JJ Corporation resells one product to a small isolated community. It sells an average of 60 sacks, but may sell as low as 20 sacks and as high as 75 sack ecah day. The supply charges 500 per sack and an additional fixed cost of 1,300 for deliveries. It takes an average of ten days for orders to arrive. Investment in inventory are funded thru debt and equity ata weighted average cost of capital of 14%. How much would the minimum total annual inventory-related costs that JJ would incur if it applies the reorder point and eoq models? Use 365 days.