1. Using the MRP system, what is the annual cost of producing and carrying J-Pods in inventory? (As- sume that, on average, half of the units produced in a month are in inventory.) 2. A new manager at Tech Works has suggested that the company use the E0Q model to determine the optimal batch size to produce. (To use the E0Q model, Tech Works needs to treat the setup cost in the same way it would treat ordering cost in a traditional E0Q model.) Determine the optimal batch size and number of batches. Round up the number of batches to the nearest whole number. What would be the annual cost of producing and carrying J-Pods in inventory if it uses the optimal batch size? Compare this cost to the cost calculated in requirement 1. Comment briefly. 3. Tech Works is also considering switching from its MRP system to a JIT system. This will result in produc- ing J-Pods in batch sizes of 600 J-Pods and will reduce obsolescence, improve quality, and result in a higher selling price. Tech Works will reduce setup time and setup cost. The new setup cost will be $500 per setup. What is the annual cost of producing and carrying J-Pods in inventory under the JIT system? 4. Compare the models analyzed in the previous parts of the problem. What are the advantages and dis- advantages of each? Required
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
MRP, EOQ, and JIT. Tech Works Corp. produces J-Pods, music players that can download thousands of songs. Tech Works
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