Diagnostic Supplies has expected sales of 98,000 units per year, carrying costs of $5 per unit, and an ordering cost of $8 per order. a. What is the economic ordering quantity? Economic ordering quantity b-1. What is the average inventory? Average inventory b-2. What is the total carrying cost? Total carrying cost units units

Diagnostic Supplies has expected sales of 98,000 units per year, carrying costs of $5 per unit, and an ordering cost of $8 per order. a. What is the economic ordering quantity? Economic ordering quantity b-1. What is the average inventory? Average inventory b-2. What is the total carrying cost? Total carrying cost units 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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Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

Diagnostic Supplies has expected sales of 98,000 units per year,
carrying costs of $5 per unit, and an ordering cost of $8 per order.
a. What is the economic ordering quantity?
Economic ordering quantity
b-1. What is the average inventory?
Average inventory
b-2. What is the total carrying cost?
Total carrying cost
units
units

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Step 2: a. Calculation of economic ordering quantity:

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Step 3: b-1 Computation of average inventory:

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Step 4: b-2 Computation of total carrying cost:

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