M. P. VanOyen Manufacturing has gone out on bid for a regulator component. Expected demand is700units per month. The item can be purchased from either Allen Manufacturing or Baker Manufacturing. Their price lists are shown in the table. Ordering cost is$50.00,and annual holding cost per unit is$5.00. Allen Mfg.Baker Mfg.QuantityUnit PriceQuantityUnit Price1-499$16.00 1-399$16.10 500-99915.50400-79915.601000+15.00800+15.10a) What is the economic order quantity if price is not a consideration?nothingunits (round your response to the nearest whole number).b) Which supplier, based on all options with regard to discounts, should be used?▼ Baker Mfg.Allen Mfg.c) What is the optimal order quantity and total annual cost of ordering, purchasing, and holding the component? The optimal order quantity isnothingwith a total cost of$nothing(round your responses to the nearest whole number).

Economic order quantity:- It refers to the fixed order quantity that minimizes the total ordering…

Answered: M. P. VanOyen Manufacturing has gone…

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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M. P. VanOyen Manufacturing has gone out on bid for a regulator component. Expected demand is

700

units per month. The item can be purchased from either Allen Manufacturing or Baker Manufacturing. Their price lists are shown in the table. Ordering cost is

$50.00,

and annual holding cost per unit is

$5.00.

Allen Mfg.	Baker Mfg.
Quantity	Unit Price	Quantity	Unit Price
1-499	$16.00	1-399	$16.10
500-999	15.50	400-799	15.60
1000+	15.00	800+	15.10

a) What is the economic order quantity if price is not a consideration?

nothing

units (round your response to the nearest whole number).

b) Which supplier, based on all options with regard to discounts, should be used?

▼

Baker Mfg.

Allen Mfg.

c) What is the optimal order quantity and total annual cost of ordering, purchasing, and holding the component?

The optimal order quantity is

nothing

with a total cost of

$nothing

(round your responses to the nearest whole number).

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