Hi
Here you have to identify the incremental cost of purchasing one-time vs keep purchasing on a monthly basis and multiply by 9% (cost of capital).
You can do it in different ways:
1)
180,000 cases equal 6 months of 30,000 monthly purchases.
Cost of one-time purchase
180,000 * $10 = $1,800,000
Cost of 6 months monthly purchases
30,000 * 6 * $12 = $ 2,160,000
Incremental cost = $360,000
Opportunity cost = $360,000 * 9% = 32,400
2)
Incremental unit cost $2 ( $12 - $10)
180,000 equals 6 months of 30,000 monthly purchases.
Incremental cost =180,000 * $2 = 360,000
Opportunity cost = $360,000 * 9% = 32,400
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Brian Ruskolekier
Controller
Buenos Aires
Argentina
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Original Message:
Sent: 01-23-2023 01:00 PM
From: Sarah Mohamed Refaat Omar
Subject: Acc receivables management p2 question
If anyone can explain this , I'll be very thankful
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Sarah Mohamed Refaat Omar
Executive Officer
Cairo
Egypt
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