Annual production of Product X is 400,000 annually. Each unit of Product X requires 2.5 units of material J. Product X is sold for 500 per unit and its total manufacturing cost is 300. Material J is purchased at 60 per unit. Carrying cost per unit of material J is 1 per unit while the ordering cost is 500 per order. How any units of material j shall the company order each time to minimize total relevant cost of inventories? a. 31,623 b. 20,000 c. 30,263 d. 26,336 e. None of these

Annual production of Product X is 400,000 annually. Each unit of Product X requires 2.5 units of material J. Product X is sold for 500 per unit and its total manufacturing cost is 300. Material J is purchased at 60 per unit. Carrying cost per unit of material J is 1 per unit while the ordering cost is 500 per order. How any units of material j shall the company order each time to minimize total relevant cost of inventories? a. 31,623 b. 20,000 c. 30,263 d. 26,336 e. None of these

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 2CE: Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An...

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Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An order to replenish the part requires a lead time of five days. Required: 1. Calculate the reorder point, using Equation 20.3. 2. Graphically display the reorder point, where the vertical axis is inventory (units) and the horizontal axis is time (days). Show two replenishments, beginning at time zero with the economic order quantity in inventory. 3. What if the average usage per day of the part is 500 units but a daily maximum usage of 575 units is possible? What is the reorder point when this demand uncertainty exists?
The following product Costs are available for Haworth Company on the production of chairs: direct materials, $15,500; direct labor, $22.000; manufacturing overhead, $16.500; selling expenses, $6,900; and administrative expenses, $15,200. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 7,750 equivalent units are produced, what is the equivalent material cost per unit? If 22,000 equivalent units are produced, what is the equivalent conversion cost per unit?
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Jamison Company produces and sells Product X at a total cost of $1,300 per unit, of which $880 is product cost and $420 is selling and administrative expenses. In addition, the total cost of $1,300 is made up of $740 variable cost and $560 fixed cost. The desired profit is $169 per unit. Determine the markup percentage on total cost.fill in the blank 1 %
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A manufacturing company uses 40,000 kilograms of a raw material evenly over a period. The material is purchased at RM2.50 per kilogram. The cost of placing an order is RM120 and the cost of holding 1 kilogram of inventory for the period is 15% of the purchase costs. Required: a. Calculate the economic order quantity (EOQ). b. Calculate the total holding of the raw material in the period if the order quantity is 6,000 kilograms and the buffer inventory is 2,000 kilograms.