The Reynolds Corporation buys from its suppliers on terms of 2/10, net 55. Reynolds has not been utilizing the discounts offered and has been taking 55 days to pay its bills. Mr. Duke, Reynolds Corporation vice president, has suggested that the company begin to take the discounts offered. Duke proposes that the company borrow from its bank at a stated rate of 14 percent. The bank requires a 20 percent compensating balance on these loans. Current account balances would not be available to meet any of this compensating balance requirement. Do you agree with Duke's proposal? Kaiser Ltd. uses the high-low method to estimate the cost function. The information for 2018 is provided below. Machine hours Labour costs ($) Month January 130 5,124 February 250 7,611 March 180 6,208 April 165 6,300 May 2401 9,800 June 80 3,200 July 155 55 6,326 August 190 7,200 September 230 8,138 October 250 8,600 November 260 10,004 December 190 7,400 What is the estimate of Kaiser's cost function when 120 machine hours are used? A. $4,347 B. $4,712 C. $4,744 D. $4,797

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 19P
icon
Related questions
Question

Give me correct answer

The Reynolds Corporation buys from its suppliers on terms of 2/10, net 55. Reynolds has not been
utilizing the discounts offered and has been taking 55 days to pay its bills.
Mr. Duke, Reynolds Corporation vice president, has suggested that the company begin to take the
discounts offered. Duke proposes that the company borrow from its bank at a stated rate of 14
percent. The bank requires a 20 percent compensating balance on these loans. Current account
balances would not be available to meet any of this compensating balance requirement.
Do you agree with Duke's proposal?
Kaiser Ltd. uses the high-low method to estimate the cost function. The information for 2018 is
provided below.
Machine hours Labour costs ($)
Month
January
130
5,124
February 250
7,611
March
180
6,208
April
165
6,300
May
2401
9,800
June
80
3,200
July
155
55
6,326
August 190
7,200
September 230
8,138
October 250
8,600
November 260
10,004
December 190
7,400
What is the estimate of Kaiser's cost function when 120 machine hours are used?
A. $4,347
B. $4,712
C. $4,744
D. $4,797
Transcribed Image Text:The Reynolds Corporation buys from its suppliers on terms of 2/10, net 55. Reynolds has not been utilizing the discounts offered and has been taking 55 days to pay its bills. Mr. Duke, Reynolds Corporation vice president, has suggested that the company begin to take the discounts offered. Duke proposes that the company borrow from its bank at a stated rate of 14 percent. The bank requires a 20 percent compensating balance on these loans. Current account balances would not be available to meet any of this compensating balance requirement. Do you agree with Duke's proposal? Kaiser Ltd. uses the high-low method to estimate the cost function. The information for 2018 is provided below. Machine hours Labour costs ($) Month January 130 5,124 February 250 7,611 March 180 6,208 April 165 6,300 May 2401 9,800 June 80 3,200 July 155 55 6,326 August 190 7,200 September 230 8,138 October 250 8,600 November 260 10,004 December 190 7,400 What is the estimate of Kaiser's cost function when 120 machine hours are used? A. $4,347 B. $4,712 C. $4,744 D. $4,797
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT