Graymont Industries purchases Solvate, a chemical compound used in several of its products, from ChemMaster. ChemMaster has just increased the list price of Solvate to $6.50 per gallon. However, because Graymont purchases a high volume of Solvate, ChemMaster grants the company a 10 percent discount off the list price. Charges for shipping Solvate from ChemMaster to Graymont's factory are $100 for a shipment of twenty-five 50-gallon drums. Special storage requirements cost $0.55 per gallon. Calculate Graymont's standard price for a gallon of Solvate. (Round answer to 2 decimal places, e. g. 3.51)

Question

Business

Hubby

21 December, 05:32

Graymont Industries purchases Solvate, a chemical compound used in several of its products, from ChemMaster. ChemMaster has just increased the list price of Solvate to $6.50 per gallon. However, because Graymont purchases a high volume of Solvate, ChemMaster grants the company a 10 percent discount off the list price. Charges for shipping Solvate from ChemMaster to Graymont's factory are $100 for a shipment of twenty-five 50-gallon drums. Special storage requirements cost $0.55 per gallon. Calculate Graymont's standard price for a gallon of Solvate. (Round answer to 2 decimal places, e. g. 3.51)

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Answers (1)

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Declan Gallagher · Answer 1

Total inventory cost for a gallon: $ 6.48

Explanation:

discount over list price: 6.50 dollars less 10% = $ 5.85

gallons ordered: 25's 50-gallon drums:

25 x 50 = 1,250

purchase cost: 1,250 gallon x $ 5.85 = 7,312.5

shipment freight: 100

Total: 7,412.5

Gallon purchase cost: 7,412.5 / 1,250 = 5.93 per gallon

$ 5.93 + holding cost of $ 0.55 = $ 6.48