20. Sheryl Corporation had been buying 1,200 units of Product A which represents a four month's supply. The cost per unit is P100; the order cost is P200 per order; and the annual inventory carrying cost for one unit is P25. Assume that the units will be required evenly throughout the year. What is the economic order quantity? a. 144 b. 240 c. 600 d. 1,200

20. Sheryl Corporation had been buying 1,200 units of Product A which represents a four month's supply. The cost per unit is P100; the order cost is P200 per order; and the annual inventory carrying cost for one unit is P25. Assume that the units will be required evenly throughout the year. What is the economic order quantity? a. 144 b. 240 c. 600 d. 1,200

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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5. Genesis Company is a wholesaler. It purchases 60.000 units of Product X per month for sale to retailers. The cost of placing an order is P100. The cost of holding one unit of inventory for one year is P4. Note: Kindly input your answer with comma. Example: 10,000 Required: Previously, the company had been purchasing 5,000 units of product X per order: a. What is the ordering cost per year under the previous policy? b. The annual carrying cost? c. How much money does the company save over the policy of purchasing 5,000 units per order using the EOQ policy?
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A manufacturing company, VMTC PLC, makes the product, blitz. Monthly sales forthe first five months of 2022 have been estimated as: Month UnitsJanuary 210 000February 180 000March 210 000April 220 000May 200 000Additional Information:i. Actual units sold in 2021 November and December were 190 000 and 220 000,respectively.ii. One unit of blitz requires 2 kg of material at $3.50 per kg.iii. One unit of blitz requires half an hour of direct labour at a rate of $12 per hour.iv. Based on past experience, 60% of cash is received in the month of sale, 25% thefollowing month, 10% two months after and 5% is usually irrecoverable.v. Selling price is $18 per unit.vi. The company intends to have finished stock at the end of each month equivalent to15% of the following month’s budgeted sales.…
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2. The ABC Company consumes inventory of 67,500 units of components per year. The carrying cost per unit is RO 1.50. The fixed order cost is RO 25 per order. The production planning is 365-day year. a. What is the Economic Order Quantity (EOQ)? Interpret. 219 S b. Calculate and interpret the optimal number of orders to be placed. the ida c. If it takes five days to receive an order from suppliers, at what inventory level should ABC Company place another order.Interpret.
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