Examine exhibit 12.8, what conclusions about the AVCO quote can you draw from the data? Are you able to make a buy decision? Transcribed Image Text: Exhibit 12.8 Quantity Discount

Examine exhibit 12.8, what conclusions about the AVCO quote can you draw from the data? Are you able to make a buy decision? Transcribed Image Text: Exhibit 12.8
Quantity Discount Analysis (Price Breaks at Specific Quantities)
1. Quotation from Avco at Specific Quantities
1 unit @ $85 each
3 units @ $80 each
6 units @ $70 each
10 units @ $69 each
2. Instructions
Line 1: Place specific quantities from the quotation on line 1 in the appropriate column. Each column represents a specific
quantity. Assume that ordering 0 is an option. This will support the quantity discount calculation.
Line 2: Place the quoted price from the supplier for each specific quantity on line 2 in the appropriate column.
Line 3: Multiply line 1 by line 2 for each column to arrive at a total price per order.
Line 4: Take the difference between the total price per order (line 3) and each successive order. For column A, it is the difference
between $85 and ordering zero pieces, or $0.00. For column B, it is the difference between column B/line 3 and column A/
line 3, or $240 – $85 = $155.
Line 5: This is the difference between each quantity break specified on line 1.
Line 6: This equals line 4 divided by line 5 for each column.
3. Price Breaks at Specific Quantities
Supplier
Avco
Part Name & No.
Compressor 04273999
Date 10/24/07
A
B
D
E
F
G
H
1. Number of units per order
1
3
6
10
2. Price per unit (quoted price)
85
80
70
69
3. Total price per order
85
240
420
690
4. Price difference between orders
85
155
180
270
5. Quantity difference between orders
1
2
3
4
6. Price per unit per order quantity difference
$85
$77.50
$60
$67.50
4. Quantity Discount Analysis
QUANTITY
TOTAL COST
INCREMENTAL QUANTITY
INCREMENTAL COST
1
$ 85
1
$85
$77.50
$77.50
3
$240
$60
$60
$60
4
5
6
$420
6
$67.50
$67.50
$67.50
$67.50
7
8
9
10
$690
10

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