Answer:
A
Explanation:
Red and White Company reported the following monthly data:Units produced $2,000 unitsSales price $25 per unitDirect materials $1 per unitDirect labor $2 per unitVariable overhead $3 per unitFixed overhead $8,000 in totalWhat is Red and White's net income under variable costing if 980 units are sold and operating expenses are $12,000?A. $(1,380)B. $(2,000)C. $2,700D. $6,620E. $10,620
Answer:
A. $(1,380)
Explanation:
The computation of the net income under the variable costing is shown below:
Net Income /(loss) = Sales Revenue - Variable cost - Fixed overhead - Operating expenses
= (980 × $25) - (980 × $6) - $8,000 - $12,000
= $24,500 - $5,880 - $8,000 - $12,000
= ($1,380)
Hence, the correct option is A. ($1,380)
We simply applied the above formula so that the correct value could come
And, the same is to be considered
Differentiate between manmade and natural attraction
A 90-day, 12% note for $10,000, dated May 1, is received from a customer on account. The maturity value of the note is:___________.
a. $10,000
b. $9,550
c. $10,300
d. $450
Answer:
c. $10,300
Explanation:
The computation of the maturity value of the note is shown below:
Maturity value of the note = Face value + interest for 90 days
= $10,000 + $10,000 × 12% × (90 days ÷ 360 days)
= $10,000 + $300
= $10,300
We simply added the face value and the interest for 90 days so that the maturity value would come
Hence, the correct option is c. $103,00
We simply applied the above formula so that the correct value could come
And, the same is to be considered
Good Guy Foods wants to establish a trust fund that will provide $125,000 in scholarships each year for needy students. The trust fund is expected to earn a fixed 7.25 percent rate of return. How much money does the firm need to contribute to the fund assuming that only the interest income is to be distributed? a. $1,687,450 b. $1,478,023 c. $1,333,333 d. $1,724,138
Answer:
Good Guy Foods
The amount that the firm needs to contribute to the fund, assuming that only the interest income is to be distributed is:
d. $1,724,138
Explanation:
a) Data and Calculations:
Distributable Trust Fund = $125,000
Rate of interest or return = 7.25%
The distributable trust fund is a product of total trust fund multiplied by the rate of return.
The total trust fund = $125,000/7.25%
= $125,000/0.0725
= $1,724,138
Check:
7.25% of $1,724,138 = $125,000
b) Good Guy Foods needs to contribute $1,724,138 in funds that will earn 7.25% annually and equal the scholarship amount of $125,000 annually.
For each of the following situations, identify (1) the case as either (a) a present or a future value and (b) a single amount or an annuity, (2) the table you would use in your computations (but do not solve the problem), and (3) the interest rate and time periods you would use. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) a. You need to accumulate $10,000 for a trip you wish to take in four years. You are able to earn 8% compounded semiannually on your savings. You plan to make only one deposit and let the money accumulate for four years. How would you determine the amount of the one-time deposit? b. Assume the same facts as in part (a) except that you will make semiannual deposits to your savings account. What is the required amount of each semiannual deposit? (Round your answer to 2 decimal places.) c-1. You want to retire after working 40 years with savings in excess of $1,000,000. You expect to save $4,000 a year for 40 years and earn an annual rate of interest of 8%. Will you be able to retire with more than $1,000,000 in 40 years?
Answer:
a. The present value of a future value of $10,000 is $7,310.
b. The present value of an annuity for a future value of $10,000 is $1,043.54.
c. Yes, you will retire with $1,036,226.07 .
Explanation:
a) Data and Calculations:
Future value = $10,000
Interest - 8% compounded semiannually
Period of investment = 4 years
Using the present value table, the discount factor of 0.731, the future value of $10,000 is $7,310
b) You will need to contribute $1,043.54 at the beginning of each period to reach the future value of $10,000.00.
FV (Future Value) $10,000
PV (Present Value) $7,306.90
N (Number of Periods) 8.000
I/Y (Interest Rate) 4.000%
PMT (Periodic Payment) $1,043.54
Starting Investment $0.00
Total Principal $8,348.30
Total Interest $1,651.70
c) $1,000,000 in 40 years:
FV (Future Value) $1,036,226.07
PV (Present Value) $47,698.45
N (Number of Periods) 40.000
I/Y (Interest Rate) 8.000%
PMT (Periodic Payment) $4,000.00
Starting Investment $0.00
Total Principal $160,000.00
Total Interest $876,226.07
Donna runs an inn and charges $300 a night for a room, which equals her cost. Sam, Harry, and Bill are three potential customers willing to pay $500, $325, and $250, respectively. When the government levies a tax on innkeepers of $50 per night of occupancy, Donna raises her price to $350. The deadweight loss of the tax is:________
a. $25
b. $50
c. $100
d. $150
Answer:
a. $25
Explanation:
According to the given situation, the computation of deadweight loss of the tax is shown below:-
Deadweight Loss = 1 ÷ 2 × 1 × ($350 - $300) = 1 ÷ 2 × ($50)
Or, Deadweight Loss = 1 ÷ 2 × ($50)
Or, Deadweight Loss = $25
Therefore the correct option is a. $25
We simply considered the above values so that the deadweight loss of the ta could come
The deadweight loss of the tax is :
According to the given situation, the computation of deadweight loss of the tax is shown below:-
Deadweight Loss = 1 ÷ 2 × 1 × ($350 - $300) = 1 ÷ 2 × ($50) Deadweight Loss = 1 ÷ 2 × ($50) Deadweight Loss = $25The deadweight loss of the tax is $25.
Thus, the correct answer is a.
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What is Jensen's alpha of a portfolio comprised of 45 percent portfolio A and 55 percent of portfolio B?
Portfolio Average Return Standard Deviation Beta
A 18.9 % 21.6 % 1.92
B 13.2 12.8 1.27
The risk-free rate is 3.1 percent and the market risk premium is 6.8 percent.
2.04 percent
0.47 percent
1.08 percent
1.46 percent
−1.25 percent
Answer:
Alpha of the overall portfolio = 2.04%
Explanation:
The alpha or abnormal return is the excess return given by a stock or a portfolio over its required rate of return. To calculate the alpha of a portfolio containing two portfolios, we first need to calculate the alpha of each individual portfolio and then take a weighted average of these alphas to determine the overall portfolio alpha.
First we need to calculate the required rate of return of each portfolio and deduct it from the Average return of portfolios to calculate individual portfolio alpha.
Using the CAPM, we can calculate the required rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.
The formula for required rate of return under CAPM is,
r = rRF + Beta * rpM
Where,
rRF is the risk free rate rpM is the market risk premium
r of A = 0.031 + 1.92 * 0.068 = 0.16156 or 16.156%
Alpha of portfolio A = 18.9 - 16.156 = 2.744%
r of B = 0.031 + 1.27 * 0.068 = 0.11736 or 11.736%
Alpha of portfolio B = 13.2 - 11.736 = 1.464%
Alpha of the overall portfolio = 0.45 * 2.744% + 0.55 * 1.464%
Alpha of the overall portfolio = 2.04%
Question 7 of 10
How does fractional reserve banking increase the money supply?
O A. By automatically converting foreign currencies into U.S. dollars on
deposit
O B. By guaranteeing that all deposits are held in reserve as cash at all
times
O C. By using deposited money to make loans without reducing the
value of the deposits
O D. By giving banks the authority to print their own money in an
economic emergency
SUBMIT
Answer: C. By Using deposited money to make loans without reducing the value of the deposits
Explanation:
A.P.E.X
Answer:
c
Explanation:
For Flynn Company, variable costs are 70% of sales, and fixed costs are $195,000. Management’s net income goal is $75,000. Compute the required sales in dollars needed to achieve management’s target net income of $75,000.
Answer:
i would 75,345 is your answer
Explanation:
The required sales in dollars needed to achieve management’s target net income of $75,000 is $900,000.
Required sales in dollarUsing this formula
Required sales in dollar=Fixed cost+ Net income/ (1-percentage)
Let plug in the formula
]Required sales in dollar=$195,000+$75,000 /(1-.70)
Required sales in dollar=$270,000/.30
Required sales in dollar=$900,000
Therefore the required sales in dollars needed to achieve management’s target net income of $75,000 is $900,000.
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How did the Medici get around the usury laws?
Answer:
they were very large nd rich family.so they used foreign exchange rate to make money
Leaf's Paper Company is planning to launch a new notebook product that is water resistant. The company wants to sell 30,000,000 of the new notebooks next year and wants to know what trial rate is required to achieve this goal. The market research group forecasts an awareness rate of 78% and an ACV% of 51%. Of those that try the product by purchasing 1 notebook, 21% will repurchase 5 notebooks per year. There are 200,000,000 notebook consumers in the target market. Total fixed costs to Leaf Paper Company to manufacture this new notebook are $11,000,000, with variable costs of $2.56 per notebook. What trial rate is required to achieve the company's goal?
Answer:
7.5%.
Explanation:
This question can be solved by using the formula below;
The trial rate is required to achieve the company's goal = ( number of new notebooks that the company wants to sell the following year) ÷ awareness rate × units per trial × ACV × number in target market.
From the Question above, we have the following information which is going to be slot in to the formula above and use in solving this question;
=> The number of new notebooks that the company wants to sell the following year = 30,000,000.
=> The awareness rate = 78%.
=> ACV% = 51%.
=> The percentage of people that will repurchase 5 notebooks per year = 21%.
=> The total number of notebook consumers in the target market = 200,000,000 .
=>'' The Total fixed costs to Leaf Paper Company to manufacture this new notebook = $11,000,000''
=> The variable costs per Notebook = $2.56.
Thus, slotting in the values respectively, we have;
Trial rate = 30,000,000 ÷ (0.78 × 5 × 0.51 × 200,000,000).
Trial rate = 0.07541478129713423.
Thus, 0.07541478129713423 × 100 = 7.5%.
Trial rate = 7.5%.
During the current month, a company that uses a job order cost accounting system purchases $50,000 in raw materials for cash. It then uses $12,000 of raw materials indirectly as factory supplies and uses $32,000 of raw materials as direct materials. Prepare entries to record these three transactions in the given order.
Record the raw materials purchase for $50,000.
Record the raw materials used indirectly in production.
Record the raw materials used directly in production.
Answer:
1. Dr Raw materials inventory 50,000
Cr Cash 50,000
2. Dr Factory overhead 12,000
Cr Raw materials inventory 12,000
3. Dr Work in process inventory32,000
Cr Raw materials inventory 32,000
Explanation:
Preparation or Journal entries
1. Preparation of the journal entry to record the raw materials purchase for $50,000
Dr Raw materials inventory 50,000
Cr Cash 50,000
2. Preparation of the journal entry to Record the raw materials used indirectly in production.
Dr Factory overhead 12,000
Cr Raw materials inventory 12,000
3. Preparation of the journal entry to Record the raw materials used directly in production.
Dr Work in process inventory32,000
Cr Raw materials inventory 32,000
Blasto, Inc., operates several mines. At one, a typical batch of ore run through the plant yields three products: lead, copper, and manganese. At the split-off point, the intermediate products cannot be sold without further processing. The lead from a typical batch sells for $50,000 after incurring additional processing costs of $15,350. The copper is sold for $94,000 after additional processing costs of $11,500, and the manganese yield sells for $65,000 but requires additional processing costs of $17,150. The joint costs of processing the raw ore, including the cost of mining, are $155,000 per batch.
Required:
Use the estimated net realizable value method to allocate the joint processing costs. (Do not round intermediate calculations.)
Lead Copper Manganese
Approximate sales value at split-off
Percent of total sales values at split-off % % %
Cost allocation
Answer:
joint processing costs allocated to lead = $32,550
joint processing costs allocated to copper = $77,500
joint processing costs allocated to manganese = $44,950
Explanation:
lead can be sold at $50,000 but needs further processing worth $15,350, so net realizable value = $50,000 - $15,350 = $34,650
copper can be sold at $94,000 but needs further processing worth $11,500, so net realizable value = $94,000 - $11,500 = $82,500
manganese can be sold at $65,000 but needs further processing worth $17,150, so net realizable value = $65,000 - $17,150 = $47,850
total realizable value = $165,000
total joint processing costs = $155,000
allocation rate of processing cost = $155,000 / $165,000 = $0.939393 per dollar of net realizable value
joint processing costs allocated to lead = $0.939393 x $34,650 = $32,550
joint processing costs allocated to copper = $0.939393 x $82,500 = $77,500
joint processing costs allocated to manganese = $0.939393 x $47,850 = $44,950
What records will appear for a left outer join with a primary table called OrderItems and a foreign table called Orders?
all Orders records
all OrderItems records
only matching OrderItems records
all of the Orders and OrderItems records
Answer:
All orderitems records
Explanation:
Answer:
all OrderItems records
Explanation:
For the first week of the month, the Flour Shop Bakery budgeted to sell 100 cakes at $35 each. They actually sold 105 cakes at $40 each. The selling-price variance is:_________.a) $525 favorable.b) $525 unfavorable.c) $700 favorable.d) $700 unfavorable.
Answer:
a) $525 favorable
Explanation:
The computation of the selling price variance is shown below:
The Selling price variance is
= Actual quantity sold × (actual selling price - expected selling price)
= 105 cakes × ($40 - $35)
= 105 cakes × $5
= $525 favorable
Hence, the selling price variance is $525 favorable
Therefore the correct option is a.
We simply applied the above formula so that the correct value could come
And, the same is to be considered
The trial balance of a company included the following account balances: Cash, $25,000, Short-Term Investments, $10,000, Accounts Receivable, $40,000, Inventory, $90,000, and Prepaid Insurance, $12,000 its quick assets totat a) $35,000 b) $125,000 c) $75,000 d) $165,000 e) $50,000
Answer:
$75,000
Explanation:
The trail balance of a company include the following
Cash of $25,000
Short term investments of $10,000
Account receivable of $40,000
Inventory of $90,000
Prepaid insurance of $12,000
Therefore it's quick assets Total can be calculated as follows
=account receivable + cash + short term investments
= $40,000+$25,0000+$10,000
= $65,000+$10,000
= $75,000
Calculate ending inventory and cost of goods sold at March 31, using the specific identification method. Date Transactions Units Unit Cost Total Cost March 1 Beginning inventory 20 $ 250 $ 5,000 March 5 Sale ($400 each) 15 March 9 Purchase 10 270 2,700 March 17 Sale ($450 each) 8 March 22 Purchase 10 280 2,800 March 27 Sale ($475 each) 12 March 30 Purchase 9 300 2,700 $ 13,200
Answer:
the information regarding the sales was missing, so I looked for similar questions:
The March 5 sale consists of bikes from beginning inventory, the March 17 sale consists of bikes from the March 9 purchase, and the March 27 sale consists of four bikes from beginning inventory and eight bikes from the March 22 purchase.
Date Transactions Units Unit Cost Total Cost
March 1 Beginning inventory 20 $ 250 $ 5,000
March 5 Sale ($400 each) 15
March 9 Purchase 10 270 2,700
March 17 Sale ($450 each) 8
March 22 Purchase 10 280 2,800
March 27 Sale ($475 each) 12
March 30 Purchase 9 300 2,700 $ 13,200
Cost of good sold under specific identification:
March 5 sale = $250 x 15 = $3,750
March 17 sale = 8 x $270 = $2,160
March 27 sale = 12 x $280 = $3,360
total COGS = $9,270
Ending inventory = $13,200 - $9,270 = $3,930
A monopolist:____.a. produces more than the competitive outcome. b. has zero profits. c. has the same profits as what would have in a competitive market. d. produces less than the competitive outcome. e. produces the same units as the competitive outcome.
Answer: d. produces less than the competitive outcome.
Explanation:
A monopolist by definition is the only one producing the certain good or service in question. This is in contrast with a competitive situation where many firms will be producing that same good.
Monopolies therefore will be unable to produce the same amount that a competitive outcome would because they would not have the capacity. This leads to a situation where monopolies can charge higher for their goods and services as opposed to competitive firms.
Discuss the relationship between competition and consumer expectations.
Answer:
The relationship between competition and consumer expectations is by what the compitition is creating in terms of product and functionability. And the consumer expectation is what will help the by buying into this product.
Explanation:
If the general level of interest rates in the economy moves up, then investors will require a _____ rate of return on securities, and, in general, stock prices should _____ , ceteris paribus.
A. lower, increase
B. higher, decline
C. higher, increase
D. lower, decline
Answer:
B. higher, decline
Explanation:
Monetary policy can be defined as the actions (macroeconomic policies) adopted and undertaken by the central bank of a particular country to control the money supply and interest rates so as to boost or enhance economic growth. The central bank uses monetary policies to manage inflation, economic growth through long-term interest rates and level of unemployment in a country. In order to boost economic growth, monetary policy is used to increase money supply (liquidity) while it is also used to prevent inflation by reducing money supply.
If the general level of interest rates in the economy moves up, then investors will require a higher rate of return on securities such as bonds, and, in general, stock prices should decline because they are less volatile, ceteris paribus (all things being equal).
Steve Smith will receive $82,870 on 5 years from now, from a trust fund established by his father. Assuming the appropriate interest rate for discounting is 10% (compounded semiannually), what is the present value of this amount today? (Round factor values to 5 decimal places, e.g. 1.25124. Round answers to the nearest whole dollar, e.g. 5,275.)
Answer:
$50,875
Explanation:
The computation of the present value is shown below:
Given that
NPER = 5 × 2 = 10
RATE = 10% ÷ 2 = 5%
PMt = $0
FV = $82,870
The formula is shown below:
= -PV(RATE;NPER;PMT;FV;TYPE)
After applying the above formula, the present value is $50,875
Hence, the present value is $50,875
We simply applied the above formula so that the correct value could come
And, the same is to be considered
The disagreements between Hamilton and Jefferson led to a revised Constitution. a reformed Congress. new cabinet members. new political parties.
Answer:
new politacal parties
Explanation:
im taking the test right now
Answer:
d
Explanation:
Monetary policy is linked to fiscal policy when government spending is financed by:_____.a) taxes. b) borrowing from banks. c) borrowing from foreigners. d) printing money.
Answer:
d) printing money.
Explanation:
Fiscal policy in economics refers to the use of government expenditures (spending) and revenues (taxation) in order to influence macroeconomic conditions such as Aggregate Demand (AD), inflation, and employment within a country. Fiscal policy is in relation to the Keynesian macroeconomic theory by John Maynard Keynes.
For instance, measuring the time between when a fiscal policy is implemented and when the people feel its impact in the society refers to a lag.
A fiscal policy affects combined demand through changes in government policies, spending and taxation which eventually impacts employment and standard of living plus consumer spending and investment. Monetary policy affects the money supply in an economy, which then creates an impact on interest rates and the inflation rate.
Additionally, a stimulative fiscal policy when combined by the government with a restrictive monetary policy will result in an increase in the interest rates.
Hence, a monetary policy is linked to fiscal policy when government spending is financed by printing money because the printing of money would significantly increase the circulation of money or money supply and most likely result in inflation.
XYZ Corporation issued 7 million shares of common stock in its initial public offering. It later purchased 500,000 shares of Treasury stock. XYZ recently engaged an underwriter to raise capital by selling an additional 3 million shares through a standby rights offering. By the expiration date of the offering, only 2 million shares were sold through exercise of the rights. As a result, how many shares will XYZ have outstanding
Answer:
The number shares XYZ will have outstanding is 8,500,000 shares.
Explanation:
Shares outstanding refers to the addition of the shares of a company that are currently held by its shareholders, the share blocks in the hands of institutional investors, and its restricted shares owned by its officers and insiders, but minus the treasury shares which are held by the company itself.
From the question, we have the following:
Number shares issued in initial public offering = 7,000,000
Treasury stock purchased = 500,000
Shares sold by the expiration date of the offering additional 3 million shares = 2,000,000
Therefore, the number of shares outstanding can be calculated as follows:
Number of shares outstanding = Number shares issued in initial public offering - Treasury stock purchased + Shares sold by the expiration date of the offering additional 3 million shares = 7,000,000 - 500,000 + 2,000,000 = 8,500,000
Therefore, the number shares XYZ will have outstanding is 8,500,000 shares.
If an advertiser wants to enhance the sales of a specific good or service, institutional advertising should be used. Select one: True O False
Answer: True.
Explanation:
Stanford issues bonds dated January 1, 2019, with a par value of $248,000. The bonds’ annual contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $229,115
1. What is the amount of the discount on these bonds at issuance?
2. How much total bond interest expense will be recognized over the life of these bonds?
3. Prepare an effective interest amortization table for these bonds.
Answer:
1. What is the amount of the discount on these bonds at issuance?
$18,885
2. How much total bond interest expense will be recognized over the life of these bonds?
total interest expense = ($248,000 x 7% x 3 years) + $18,885 = $70,965
3. Prepare an effective interest amortization table for these bonds.
see attached PDF
Explanation:
the journal entry to record the issuance
January 1, 2019, bonds issued at a discount
Dr Cash 229,115
Dr Discount on bonds payable 18,885
Cr Bonds payable 248,000
Bumble Bee Co. had taxable income of $7,000, tax depreciation of $5,000, book depreciation of $2,000, and accrued warranty expense of $400 on the books although no warranty work was performed. What is Bumble Bee's pretax accounting income?
Answer:
$9,600
Explanation:
Calculation for Bumble Bee's pretax accounting income
Using this formula
Pretax accounting income=Taxable income-Accrued warranty expense+(Tax depreciation-Book depreciation)
Let plug in the formula
Pretax accounting income=$7,000-$400+($5,000-$2,000)
Pretax accounting income=$7,000-$400+$3,000
Pretax accounting income=$9,600
Therefore Bumble Bee's pretax accounting income will be $9,600
In wisely planning for your retirement, you invest $12,000 per year for 20 years into a 401k account. How much will you be able to withdraw each year for 10 years, starting one year after your last deposit, if you can earn a real return of 10% per year and the inflation rate averages 2.8% per year?
Answer:
Annual withdraw= $173,483.28
Explanation:
The real rate of return is the result of deducting from the nominal rate the inflation rate.
First, we will determine the nominal rate of return:
Nominal rate= 0.10 + 0.028= 0.128
Now, we need to calculate the value of the investment at the time of retirement:
Annual deposit= $12,000
Interest rate= 0.128
Number of periods= 20 years
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
FV= {12,000*[(1.128^20) - 1]} / 0.128
FV= $948,935.34
Finally, the annual withdrawal:
Annual withdraw= (FV*i) / [1 - (1+i)^(-n)]
Annual withdraw= (948,935.34*0.128) / [1 - (1.128^-10)]
Annual withdraw= $173,483.28
The demand for football tickets is Q = 360 â 10P and the supply of football tickets is Q= 20P. The government levies a per-ticket tax of $4, which is paid by consumers. Calculate the after-tax price paid by consumers. Calculate the gross price received by ticket sellers. What are consumerâs and producerâs tax burdens?
Answer:
After tax price paid by consumers
Supply function n terms of price;
P = Q / 20
P = 0.05Q
Add the tax;
P = 0.05Q + 4
Demand function in terms of price is;
Q = 360 – 10P
P = (Q - 360) / -10
Price will be;
Demand = Supply
(Q - 360) / -10 = 0.05Q + 4
36 - 0.1Q = 0.05Q + 4
0.15Q = 32
Q = 213
After tax price = 36 - 0.1Q
= 36 - 0.1 * (213)
= $14.70
Gross price for ticket sellers is;
= Price - tax
= 14.7 - 4
= $10.70
Consumer and Producer tax burden.
Without tax, price is;
36 - 0.1Q = 0.05Q
0.15Q = 36
Q = 240
P = 36 - 0.1 * 240
= $12
Consumer tax burden = 14.70 - 12 = $2.70
Producer tax burden = Tax - consumer tax burden = 4 - 2.7 = $1.30
Concert Production is planning an appearance of the top band Iggy Wiggy. They plan to buy custom desgined T-shirts to sell at the stadium where the concert will take place. The T-shirt will sell for $25 and the cost per shirt is $8. Previous experience at the Concert Productions suggests that after the concert is over, T-shirts can still be sold, but the selling price will only be $5 per shirt. Based on analysis of previous similar concerts, the company estimates sales of the T-shirt will be 6,000 units. However, the analysis also shows that the standard deviation in similar situations is 800 units.
How many Iggy Wiggy T-shirts should the company order?
Answer:
Iggy Wiggy T-shirts should order 6,829 units of T-shirt
Explanation:
Cost per T-shirt = $8.00
Selling Price per T-shirt = $25
Marginal Profit = 25 - 8 = $17
Marginal Loss when t-shirt is sold for $5 = $8 - $5 = $3
Mean = 6000 units
Standard deviation = 800 units
Using the News Vendor Model
Q = MP / MP + ML
Q = 17 / (17+3)
Q = 17 / 20
Q = 0.85
Using NORMINV in Ms excel
= NORMINV (probability, mean, standard deviation)
= NORMINV(0.85,6000,800)
= 6829.14 units
Thus, Iggy Wiggy T-shirts should order 6829 units of T-shirt.