Abner Company has an annual demand of 13,000 units of Material A. The cost per unit is P14. The order cost is P200 per order, and ihe annual inventory carrying cost per unit is P5.20. Assume that the units will be required evenly throughout the year. Required: Compute for the following:

Abner Company has an annual demand of 13,000 units of Material A. The cost per unit is P14. The order cost is P200 per order, and ihe annual inventory carrying cost per unit is P5.20. Assume that the units will be required evenly throughout the year. Required: Compute for the following:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Your Company has just obtained a request for a special order of 6,000 units to be shipped at the end…

A: Given,

Q: The production department of Zan Corporation has submitted Le following forecast of units to be…

A: Direct Material Budget :— This budget is prepared to estimate the number and cost of raw materials…

Q: A company requires 8,000 units of material A per month. The cost per order is $950 and the holding…

A: Total cost of buying the material includes holding cost + ordering cost

Q: Tamarisk Inc is a company that manufactures and sells a single product. Unit sales for each of the…

A: Profitability means revenue minus expenses, whatever is left over is the profit. Businesses can’t…

Q: The production department of Zan Corporation has submitted the following forecast of units to be…

A: To prepare the company's direct materials purchases budget and schedule of expected cash…

Q: Jessup Company expects to incur manufacturing overhead costs of $20,000 each month during the year…

A: Sales price = Cost per unit + Profit per unit Cost = Direct material + Direct labor + Manufacturing…

Q: Gardner Company sells a product for $65 per unit. Variable costs are $30 per unit and fixed costs…

A: Formula used: Total contribution margin = Contribution margin per unit x Number of units sold

Q: The production department of Zan Corporation has submitted the following forecast of units to be…

A: Direct material purchase budget is the statement which is prepared by the entity to estimate the…

Q: 1st Quarter 8,600 2nd Quarter 6,500 3rd Quarter 7,300 4th Quarter 8, 200 Units to be produced Each…

A: Total direct labor hours required = Direct labor hours required per unit * Units produced Total…

Q: The production department of Zan Corporation has submitted the following forecast of units to be…

A: The raw materials purchase budget is prepared as below: Raw materials purchase budget1st…

Q: please solve all requirements

A: Part 1: Answer:Estimated grams of raw material to be purchased and the cost of raw material…

Question

Problem 2
Abner Company has an annual demand of 13,000 urits of Material A. The cost per
unit is P14. The order cost is P200 per order, and the annual inventory carrying cost
per unit is P5.20. Assume that the units will be required evenly throughout the year.
Required: Compute for the following:
a. Economic order quantity
b. Number of orders in a year.
c. Average inventory based on economic order quantity.
d. Total carrying cost and total ordering costs at economic order quantity.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

A company sells one of its products for $13.80 per unit. Its fixed costs are $1,080.00 per month, and the variable cost per unit is $4.80. The production capacity is 625 units per month. (a) The break-even volume, i.e., the level of output at break-even, is per month. (If necessary, round up to the next whole number of units.) (b) The break-even volume as a percent of capacity is your answer to two decimal places.) units (d) The net income at the break-even level of output is $ %. (If necessary, round (c) The break-even revenue, i.e., the total revenue at the break-even level of output, is $ per month.
Blossom Company makes radios that sell for $40 each. For the coming year, management expects fixed costs to total $126,380 and variable costs to be $32 per unit. Compute the sales dollars required to earn net income of $153,620.
The production department of Zan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: Units to be produced 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 16,000 19,000 18,000 17,000 In addition, 16,000 grams of raw materials inventory is on hand at the start of the 1st Quarter and the beginning accounts payable for the 1st Quarter is $7,000. Each unit requires 4 grams of raw material that costs $1.80 per gram. Management desires to end each quarter with an inventory of raw materials equal to 25% of the following quarter's production needs. The desired ending inventory for the 4th Quarter is 5,000 grams. Management plans to pay for 60% of raw material purchases in the quarter acquired and 40% in the following quarter. Each unit requires 0.40 direct labor-hours and direct laborers are paid $12.50 per hour. Required: 1. and 2. Calculate the estimated grams of raw material that need to be purchased and the cost of raw material…
Use the information below for Mandy Corporation to answer the question that follow. Mandy Corporation sells a single product. Budgeted sales for the year are anticipated to be 696,000 units, estimated beginning inventory is 106,000 units, and desired ending inventory is 89,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below.Material A: 0.50 lb. per unit @ $0.71 per poundMaterial B: 1.00 lb. per unit @ $1.89 per poundMaterial C: 1.20 lb. per unit @ $0.84 per poundThe dollar amount of Material B used in production during the year is
A firm orders on average 400 wheels each month. Demand is normally distributed with standard deviation of the monthly demand being 20 wheels. The ordering cost is $8 per order. The cost to buy one wheel is $4 per wheel. Annual carrying costs are 50% of unit cost. The supplier lead time is 2 operating days. The firm operates 240 days per year, in other word, the firm operates 20 days each month. Each order is received from the supplier in a single delivery. There are no quantity discounts. Write your answer and then Round your answer up to the nearest number for future calculation. (e.g 9.6 => 10). Please clearly write down the formulation and calculation for your answers. Note: Here I make the time measures bolded for you to make you pay the attention to their differences. Please notice the difference in times measure units, so that you do not make mistake by doing calculations with different time measures. You need to convert the data to the same time measures before doing any…
The PILLOW Co. manufactures two products, AA and BB. The following are projections for the coming month: AA BBSales P100,000 P150,000Costs: Variable 60,000 40,000 Fixed cost for the period is P45,000. 1. Compute for the total breakeven sales.2. Determine the sales requirement for each product to breakeven.
What is Hershey's operating cash flow to operating income ratio in 2022 under the replacement cost?
ABC company uses 8,000 pens every year. For each pen, cach order cost is $30 and the annual holding cost is 10 per cent of unit cost. The unit cost depends on the quantity ordered as follows: Quantity 1-199 Unit Cost (S) 20 200-499 18 500-799 16 800+ 12 > Assume that demand has a constant rate and do not stockout; a) What is the optimal order size? b) Determine the yearly order quantity
ABC Company sells a product for $100 per unit. Variable costs are $60 per unit, and fixed costs are $3,000 per month. The company expects to sell $600 units in September using the contribution margin format. In the income statement for September using the Contribution Margin Format, the Contribution Margin is and the Operating Income is_ O $20,000 and $22,000 O $22,000 and $19,000 O $24,000 and $21,000 O $23,000 and $20,000 O $21,000 and $18,000
Faber Manufacturing, Inc., of St. Paul, Minnesota has an economic order quantity considering backordering of 763, a maximum backordering quantity in units of 480, annual holding cost/unit = $3.5; lead time = 1.4 month (the firm operates 12 months per year). If the firm's customers do not object to backordering and each unit backordered costs $ 4.5/year, then: What is the maximum inventory level?