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Name: MM Co. expects total sales of P10,000. The price per unit is P5. The f
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Description: MM Co. expects total sales of P10,000. The price per unit is P5. The firm estimates an ordering cost of P7.50 per order, with an inventory cost of P0.70 per unit. What is the optimum order size?A. 147 unitsB. 207 units C. 327 unitsD. 463 units

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0 per unit. What is the optimum order size? A. 147 units

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 3CE: Pietro expects to produce 50,000 units and sell 49,300 units. Beginning inventory of finished goods...

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

MM Co. expects total sales of P10,000. The price per unit is P5. The firm estimates an ordering cost of P7.50 per order, with an inventory cost of P0.70 per unit. What is the optimum order size?

A. 147 units

B. 207 units

C. 327 units

D. 463 units

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