Problem 6: Thompson Paint Company uses 60,000 gallons of pigment per year. The cost ofordering pigment is $200 per order, and the cost of carrying the pigment ininventory is $1 per gallon per year. The firm uses pigment at a constant rate everyday throughout the year.a. Calculate the EOQ.b. If it takes 20 days to receive an order once it has been placed, determine thereorder point in terms of gallons of pigment. (Note: Use a 365-day year.)

Economic order quantity calculates the ideal quantity of units a company must order and purchase…

Answered: ering pigment is $200 per order, and…

ering pigment is $200 per order, and the ntory is $1 per gallon per year. The firm us throughout the year. a. Calculate the EOQ. b. If it takes 20 days to receive an order onc

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: Time le Sales in July was US$50,000. The company's collection policy is like this, 30% in the month…

A: Sales represents the revenue that a company is able to generate by selling the core business…

Q: 5. Economic Order Quantity Jimin Company requires 40,000 units for its signature product BTS. The…

A: Formula : Economic order quantity (EOQ) = (2 x Annual Consumption x Ordering cost per…

Q: U.S Telephone Cellular sells phones for $100. The unit variable cost per phone is $50 plus a selling…

A: The break even sales units are the sales where business earns no profit no loss.

Q: Find EOQ and total cost per year to order and carry Adam jigs and tools uses 3,200 units of a…

A: Formula for EOQ: = Square root of √ (2 * A * O / C) Where A=Annual demand O=Ordering cost C=…

Q: The Xenopeltis Company estimates its requirement, which is 39,000 units semiannually at a price of…

Q: Rose Turkish company is a new company and will start to operations in January, 2022. Its beginning…

A: A cash budget is an estimation of the cash flows of a business over a specific period of time.

Q: If you have determined that you are going to sell 15 500 units at R35/unit for next month. Determine…

A: Budgets are the estimates made for future period of time. Cash budget and labour cost budget are two…

Q: Q1// A company estimates that it will sell 12000 units of its product for the forthcoming year. the…

A: Inventory: It is the stock of goods that, in all form, the company holds at a point of time. The…

Q: P3-5.Asupplier'selis MF Tiresto dealers. The annual.demandis approximately 1.000 tires The supplier…

A: The question is based on the concept of Cost Accounting. As per the Bartleby guidelines we are…

Q: Buyer A bought 20 pcs of product Z from Seller B with the following information: Selling price,…

A: Inventory- Inventory refers to the physical stock of items owned by a company at any given time.

Q: 1. MGR Corporation sells table napkins. These are sold by dozen per package for Php 20. They sell…

A: whenever there are production of goods and services there is environment of the cost associated with…

Q: Stocks of cement on a construction site are allowed to run down to a level of 3 tonnes before being…

A: The economic order quantity is the optimal order quantity that minimizes the total cost related to…

Q: b. Prepare a Cash Budget for Muhibbah Harmoni Sdn Bhd for the third quarter of 2022.

A: Cash Budget shows an estimate of the anticipated receipts and payment of cash during the budget…

Q: The monthly electricity bill for Company XYZ comprises of two components: a flat subscription fee of…

A: Electricity bill comprises of fixed cost i.e flat subscription fee and variable cost i.e. constant…

Q: RelyaTech Corporation plans to sell 31,000 units during June. RelyaTech has 12,000 units on hand at…

A: The question is based on the concept of Cost Accounting.Units produced during the period along with…

Q: .uper - kes lach in Company plans to sell 19,000 T-shirts at dile the Loming year - Poduct costs…

A: Variable Product Cost = Direct Materials + Direct Labor + Variable OH Total Variable Cost = Direct…

Q: Pauline Corporation issues P800,000 of commercial paper every 3 months at a 16 percent rate. Each…

A: Interest for 3 months = commercial paper x rate of interest x no. of months/12 = P800000 x 16% x…

Q: he Xenopeltics Company estimates its requirement, which is 39,000 units semiannually at a price of…

A: Economic Order Quantity = (2S0 / C)1/2 where, C = carrying cost per unit = $4 * 0.15 = $0.60 S =…

Q: The Xenopeltics Company estimates its requirement, which is 39,000 units semiannually at a price of…

A: Carrying cost = Cost per unit * Carrying cost rate per annum

Q: Demand for an item is 16 units a week. The unit cost of each item $5,000, while the ordering costs…

A: Since we answer upto three sub-parts, we shall answer first three. Please resubmit a new question…

Q: The monthly electricity bill for Company XYZ comprises of two components: a flat subscription fee of…

A: Following is the answer to given question

Q: should order units times a year. he minimum inventory cost is $

A: Given :- Annual demand = D = 3000 UNITS Ordering cost = Co = $50 Annual unit inventory carrying cost…

Q: A) What is the EOQ? B) If they order 1000 at a time, what are total ordering and holding costs per…

A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: The monthly electricity bill for Company XYZ comprises of two components: a flat subscription fee of…

A: Semi-variable expenses are those expenses which consist of both fixed and variable portion. Fixed…

Q: Alexander pump LLC uses about 75000 valves per year and the usage is fairly constant at 6250 units…

A: Economical order quantity- It defines as the level of inventory that decreases the total ordering…

Q: a) Economic Order Quantity (EOQ) b) Number of orders per annum c) Time between two consecutive…

A: Meaning of EOQ EOQ refers to Economic Order Quantity which defines the optimal quantity where the…

Q: XYZ Inc. needs 325 of a material per month. It costs OMR 100 to make and receive an orderand it…

A: Annual demand=Quantity per month×12=325×12=3,900 kg

Q: P3-3 Aeon Laketown predicis that 10,000. unis' of matérials will be used during the year. The…

A: Inventory levels are calculated to know the best to best optimum option for the oraganisation. There…

Q: H Limited manufactures 5,000 units of perfumes per month. The cost of placing an order is GHC…

A: Economic Order Quantity (EOQ) The Economic Order Quantity (EOQ) is the optimal order quantity that…

Q: A component manufacturer requires 5000 MT of special alloys per year. The ordering cost is $2000 per…

A: Economic order quantity indicates the number of units to be ordered, So that company can minimize…

Q: A December promotion of 1,500 crystal bud vases to retail at $40 each is planned. The buyer requires…

A: The meaning of markup is the gross or total profit on a particular commodity or service. It is also…

Q: The Xenopeltis Company estimates its requirement, which is 39,000 units semiannually at a price of…

A: Economic order quantity indicates the total units to be ordered at one time. This EOQ level is…

Q: Great Calls has a special plan offer this month. There is a $6.00 per month charge each month and…

A: Cost refers to the actual amount for something whether this could be a cost of purchase by the…

Q: Vallie Enterprise sells a product that cost $200 per unit and has a monthly demand of 500 units. The…

A: Inventory Control - The aim of inventory control is to achieve maximum efficiency in the management…

Q: how many weeks are there between each optimal order quantity?

A: Economic Order Quantity (EOQ) is the inventory level at which the company is able to minimize the…

Q: The Xenopeltis Company estimates its requirement, which is 39,000 units semiannually at a price of…

A: EOQ:- Economic order quantity model is used to calculate the optimal order size to reduce the cost…

Q: XYZ Inc. needs 400 kgs of a material per month. It costs OMR 100 to make and receive an orderand it…

A: Correct option is as fallows Re order point = average daily sales × lead time + safety stock

Q: A company manufacturing electronics equipment purchases transistors at Rs . 41 per unit. The annual…

A: Economic Ordering Quantity: It refers to the size of the order which gives maximum economy in…

Q: 5. Genesis Company is a wholesaler. It purchases 60.000 units of Product X per month for sale to…

A: As per the question we first find the Economic Order Quantity (EOQ)After that as the question asked…

Question

Problem 6: Thompson Paint Company uses 60,000 gallons of pigment per year. The cost of
ordering pigment is $200 per order, and the cost of carrying the pigment in
inventory is $1 per gallon per year. The firm uses pigment at a constant rate every
day throughout the year.
a. Calculate the EOQ.
b. If it takes 20 days to receive an order once it has been placed, determine the
reorder point in terms of gallons of pigment. (Note: Use a 365-day year.)

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

VIEW

Step 2

VIEW

Step by step

Solved in 2 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

The Xenopeltics Company estimates its requirement, which is 39,000 units semiannually at a price of $4 per unit. The carrying cost at 15% of the price and its ordering cost at $90 oer order. On a 360-day basis, determine the following:
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 monthly electricity bill for Company XYZ comprises of two components: a flat subscription fee of $450 per month and constant rate per kilo watt of $18. Assume that Company XYZ consumed 500 kilo watts during the month of December, how much the total electricity bill, in ($) value, for the month of December would be? Select one: O a. 950 O b. 500 O c. 9,450 O d. 9,000 O e. None of the given answers
The Xenopeltis Company estimates its requirement, which is 39,000 units semiannually at a price of $4 per unit. The carrying cost at 15% of the price and its ordering cost at $90 per order. On a 360-day basis, determine the following: How much is the annual requirement? A. 78,000 units B. Php 39,000 C. Php 78,000 D. 39,000 units E. 156,000 units
You piace an order for 400 units of inventory at a unit price of P125. The supplier offers terms of 1/10, net 30. 1. f you take the full period, how much should you remit? 2. If you do take the discount, how much should you remit? The Luffy store begins each week with 300 bracelets in stock. This stock is depleted each week and reordered. If the carrying cost per bracelet is P41 per year and the fixed order cost is P95. 3. What is the total carrying cost?
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.…
Use the information provided below to calculate the economic order quantity (expressed to the next whole number). INFORMATION Savoy Traders intends purchasing 19 200 watches at R80 each in the next year. The watches will be sold for R120 each at a steady rate during the year. The cost of placing a single order for the watches amounts to R24. The inventory holding cost amounts to 10% of the unit purchase price.
4. Nestle Ltd. It produces its premium plant food in 50 Kg bags. Demand is 100,000 Kgs. per week and the plant operates 52 weeks each year. Nestle can produce 250,000 Kgs. per week. The setup cost is OMR 200 and the annual holding cost rate is OMR 0.40 per bag. What will the optimal duration of the downtime in years ? a.None is correct b. 0.076 c. 0.069 d. 0.721 e. 0.065 O f. 0.502
The Xenopeltics Company estimates its requirement, which is 39,000 units semiannually at a price of $4 per unit. The carrying cost at 15% of the price and its ordering cost at $90 oer order. On a 360-day basis, determine the following:
If annual demand is 24,000 units, orders are placed every 0.5 months, and the cost to place an order is $50, what is the annual ordering cost? a) 50. b) 600. c) 1200. d) 2400. e) Can not be determined.