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LO.10 (Appendix: EPR) Gale's Garden grows and sells a variety of indoor and outdoor plants and garden vegetables. One of the firm's more popular vegetables is a red onion, which has an annual sales quantity of approximately 30,000 pounds. Two of the major inputs in the growing of onions are seeds and fertilizer. Due to the poor germination rate, two seeds must be purchased for each onion plant grown (a mature onion plant provides 0.5 pound of onion). Also, 0.25 pound of fertilizer is required for each pound of onion produced. The following information summarizes costs for onions, seeds, and fertilizer. Carrying costs for onions are expressed per pound of onion; carrying costs for seeds are expressed per seed; and for fertilizer, carrying costs are expressed per pound of fertilizer. To plant onions, the company incurs a cost of $50 to set up the planter and the fertilizing cauinment.

LO.10 (Appendix: EPR) Gale's Garden grows and sells a variety of indoor and outdoor plants and garden vegetables. One of the firm's more popular vegetables is a red onion, which has an annual sales quantity of approximately 30,000 pounds. Two of the major inputs in the growing of onions are seeds and fertilizer. Due to the poor germination rate, two seeds must be purchased for each onion plant grown (a mature onion plant provides 0.5 pound of onion). Also, 0.25 pound of fertilizer is required for each pound of onion produced. The following information summarizes costs for onions, seeds, and fertilizer. Carrying costs for onions are expressed per pound of onion; carrying costs for seeds are expressed per seed; and for fertilizer, carrying costs are expressed per pound of fertilizer. To plant onions, the company incurs a cost of $50 to set up the planter and the fertilizing cauinment.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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LO.10 (Appendix: EPR) Gale's Garden grows and sells a variety of indoor and outdoor plants and garden vegetables. One of the firm's more popular vegetables is a red onion, which has an annual sales quantity of approximately 30,000 pounds. Two of the major inputs in the growing of onions are seeds and fertilizer. Due to the poor germination rate, two seeds must be purchased for each onion plant grown (a mature onion plant provides 0.5 pound of onion). Also, 0.25 pound of fertilizer is required for each pound of onion produced. The following information summarizes costs for onions, seeds, and fertilizer. Carrying costs for onions are expressed per pound of onion; carrying costs for seeds are expressed per seed; and for fertilizer, carrying costs are expressed per pound of fertilizer. To plant onions, the company incurs a cost of $50 to set up the planter and the fertilizing equipment. Onions Seeds Fertilizer Carrying cost $ 0.25 $0.01 $0.05 Ordering cost $4.25 $8.80 Setup cost $50.00 a. What is the economic production run for onions? b. How many production runs will Gale's Garden make for onions annually? c. What are the economic order quantities for seeds and fertilizer? d. How many orders will be placed for seeds? For fertilizer? e. What is the total annual cost of ordering, carrying, and setting up for onion production?
Transcribed Image Text:LO.10 (Appendix: EPR) Gale's Garden grows and sells a variety of indoor and outdoor plants and garden vegetables. One of the firm's more popular vegetables is a red onion, which has an annual sales quantity of approximately 30,000 pounds. Two of the major inputs in the growing of onions are seeds and fertilizer. Due to the poor germination rate, two seeds must be purchased for each onion plant grown (a mature onion plant provides 0.5 pound of onion). Also, 0.25 pound of fertilizer is required for each pound of onion produced. The following information summarizes costs for onions, seeds, and fertilizer. Carrying costs for onions are expressed per pound of onion; carrying costs for seeds are expressed per seed; and for fertilizer, carrying costs are expressed per pound of fertilizer. To plant onions, the company incurs a cost of $50 to set up the planter and the fertilizing equipment. Onions Seeds Fertilizer Carrying cost $ 0.25 $0.01 $0.05 Ordering cost $4.25 $8.80 Setup cost $50.00 a. What is the economic production run for onions? b. How many production runs will Gale's Garden make for onions annually? c. What are the economic order quantities for seeds and fertilizer? d. How many orders will be placed for seeds? For fertilizer? e. What is the total annual cost of ordering, carrying, and setting up for onion production?
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