Suppose a certain car manufacturer's incentive program designed to reduce inventory of certain low-selling models offers a $8,000 extra dealer incentive for each of these vehicles that the dealer moved into its rental or service fleets. As the accountant for a dealership with a number of these vehicles left in stock, your manager has asked you to calculate certain invoice figures. The normal trade discount from this car manufacturer is 19%. If the average sticker price (list price) of these remaining vehicles at your dealership is $24,500, calculate the following. (a) What is the amount of the trade discount, including the incentive (in $)? $ 12,655 (b) What is the trade discount rate (in percent)? Round to the nearest tenth of a percent. 51.7 % (c) What is the net price (invoice price) to your dealership (in $)? $ 11,845 (d) If the cars were then sold from the fleets at $1,000 over "invoice" (net price), what is the total percentage savings to the consumer based on the list price? Round to the nearest tenth of a percent. % (e) Although these incentive prices reflect extraordinary discounts to the consumer, what other factors should a consumer consider before purchasing a "discontinued" brand of vehicle? (Select all that apply.) O net worth of the car dealership total number of vehicles manufactured this year availability of parts and service O vehicles may be more difficult to resell vehicle will be worth less than comparable models that are not discontinued

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 10P

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Transcribed Image Text:Suppose a certain car manufacturer's incentive program designed to reduce inventory of certain low-selling models offers a $8,000 extra dealer incentive for each of these vehicles that the dealer moved into its rental or service fleets. As the accountant for a dealership with a number of these vehicles left in stock, your manager has asked you to calculate certain invoice figures. The normal trade discount from this car manufacturer is 19%. If the average sticker price (list price) of these remaining vehicles at your dealership is $24,500, calculate the following. (a) What is the amount of the trade discount, including the incentive (in $)? $ 12,655 (b) What is the trade discount rate (in percent)? Round to the nearest tenth of a percent. 51.7 % (c) What is the net price (invoice price) to your dealership (in $)? $ 11,845 (d) If the cars were then sold from the fleets at $1,000 over "invoice" (net price), what is the total percentage savings to the consumer based on the list price? Round to the nearest tenth of a percent. % (e) Although these incentive prices reflect extraordinary discounts to the consumer, what other factors should a consumer consider before purchasing a "discontinued" brand of vehicle? (Select all that apply.) net worth of the car dealership total number of vehicles manufactured this year availability of parts and service vehicles may be more difficult to resell vehicle will be worth less than comparable models that are not discontinued

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