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roduce Company needs to know the pounds of bananas to have on hand each day. Each...

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Accounting

roduce Company needs to know the pounds of bananas to have onhand each day. Each pound of bananas costs $.25 and can be sold for$.40 Unsold bananas are worthless at the end of the day. Thefollowing demands were found after studying the last six monthssales: 200 pounds of bananas one fourth of the time. 300 pounds ofbananas one half of the time 400 pounds of bananas one half of thetime required determine whether ABC grocery should order 200,300 or400 pounds of banans

Answer & Explanation Solved by verified expert
4.1 Ratings (482 Votes)

Past Trend Demand Time Demand * Time
200 1/4 50
300 1/2 75
400 1/2 100
Average Demand 225
Since the demand above is between 200 & 300.We need to do additional Analysis
Comparative Statement:
Order Size 200 300
Sales(200*0.40)/(225*0.40) 80 90
Less: Cost of Material 50 75
(200*0.25)/(300*0.25)
Net Benefit 30 15
Since company has more benefit in Selling & Ordering 200 Units it should do so
200
Past Trend Demand Time Demand * Time
200 1/4 50
300 1/2 75
400 1/2 100
Average Demand 225
Since the demand above is between 200 & 300.We need to do additional Analysis
Comparative Statement:
Order Size 200 300
Sales(200*0.40)/(225*0.40) 80 90
Less: Cost of Material 50 75
(200*0.25)/(300*0.25)
Net Benefit 30 15
Since company has more benefit in Selling & Ordering 200 Units it should do so
200

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