TABLE 7-1 Aging of Accounts Receivable
Customer Outstanding Balance Days Outstanding
15,000$ 30
27,000 45
315,000 30
412,000 70
Customer 0–30 31–60 61–90 90+
15,000$
27,000$
315,000
Aging Schedule
Days Outstanding
Warehouse storage cost (I) = 0.40
Ordering cost (S) = 10.00$
Annual demand (D) = 16,000
Price Discount Quantity EOQ Quantity to Order Total Cost
20.00$ 0–500 200.00 200 321,600.00$
TABLE 7-2 EOQ with Quantity Discounts
Total costs for each quantity
TABLE 7-3 Hannah’s Donut Shop Inventory List
Item
Number
Item Description
Annual
Demand
Unit Cost Total Cost
1 Bavarian cream filling 100.0 15.00$ 1,500.00$
2 Bleach 104.0 0.60 62.40
3 Blueberry filling 15.6 20.10 313.56
4
Bread flour for raised doughnuts
990.0 6.10 6,039.00
12 Chunky apple 20.8 16.95 352.56
13 Comet 26.0 0.40 10.40
14 Degreaser 10.4 6.40 66.56
26 Sweet N Low 2.6 8.39 21.81
27 Trash bags 10.4 8.70 90.48
28 Urn coffee 45.0 46.50 2,092.50
29 #1 doughnut trays 60.0 22.00 1,320.00
30 #2 doughnut trays 52.0 21.50 1,118.00
Total inventory cost 83,194.75$
TABLE 7-4 Hannah’s Donut Shop, ABC Analysis
Item
Number
Item Description
Annual
Demand
Unit Cost Total Cost Percentage
Cumulative
Percentage
1 Shortening 950.0 22.80$ 21,660.00$ 26.04% 26.04%
2 Raised mix 990.0 21.50 21,285.00 25.58% 51.62%
3 Cake doughnut mix 625.0 30.50 19,062.50 22.91% 74.53%
8 #1 doughnut trays 60.0 22.00 1,320.00 1.59% 89.49%
9 Chocolate doughnut mix 52.0 25.10 1,305.20 1.57% 91.06%
10 #2 doughnut trays 52.0 21.50 1,118.00 1.34% 92.40%
22 Lemon mist filling 10.4 13.20 137.28 0.17% 99.59%
23 Trash bags 10.4 8.70 90.48 0.11% 99.69%
24 Degreaser 10.4 6.40 66.56 0.08% 99.77%
25 Bleach 104.0 0.60 62.40 0.08% 99.85%
Item Number Quantity Unit Cost
10010 1–99 15.00$
100–499 14.50
TABLE 7-5 Quantity Discounts
Harriet’s ABC Analysis
Item
Annual
Cost
Percentage
of Sales
Cumulative
Percentage
ABC
Classification
Roses 10,000$ 49.10% 49.10% A
Carnations 5,500 27.01% 76.11% A