Salam's company expects its production of pipes will require 600,000 tons of aluminum over its planning period . Demand for pipes products is stable over time. Ordering costs amount to an average of $ 15.00 per order. Holding costs are estimated at $1.4 per ton of aluminum. Find the following : Economic order quantity (EOQ) is

Salam's company expects its production of pipes will require 600,000 tons of aluminum over its planning period . Demand for pipes products is stable over time. Ordering costs amount to an average of $ 15.00 per order. Holding costs are estimated at $1.4 per ton of aluminum. Find the following : Economic order quantity (EOQ) is

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 18M

See similar textbooks

Similar questions

Aeon Laketown predicts that 10,000 units of materials will be used duringthe year. The expected daily usage is 40 units. The expected lead time is 6days, and there is a safety stock of 300 units. Aeon expects that the cost ofmaterials will be P480 per unit. It anticipates that it will cost P200 to placeeach order. The annual carrying cost is P1.00 per unit.Required:a. Calculate the order point.b. Calculate the economic order quantity.c. Calculate the total ordering and carrying costs at EOQ point.
Assume that a manufacturer can purchase a needed component from a supplier at a cost of $9.50 per unit, or it can invest $60,000 in equipment and produce the item at a cost of $7.00 per unit. (a) Determine the quantity for which total costs are equal for the make and buy alternatives. (b) What is the minimum cost alternative if 15,000 units are required? What is the minimum cost? (c) If the number of units required of the component is close to trhe break even quantity, what factors might might influence the final decision to make or buy
Nisse AB manufactures insulating materials of different thicknesses in the same production facility. The company manufactures three different product variants (PV) in thicknesses of 10 mm, 20 mm and 30 mm. For the coming years, the following production is planned:PV Thickness Quantity1 10 mm 15 0002 20 mm 30 0003 30 mm 15 000The total manufacturing cost is estimated at SEK 3,000,000.Calculate the cost of the different product variants using an equivalent calculation
The XYZ company has traditionally ordered ink refills 80 units at a time. This company estimates that carrying cost is S 5 /unit/year; and that annual demand is about 400 units per year. Question: for what value of the ordering cost (i.e., cost/order) would the current order quantity be optimal? Show all the details of your calculations to get full marks.
Bryant Company has already manufactured 21,000 units of Product A at a cost of $15 per unit. The 21,000 units can be sold at this stage for $410,000. Alternatively, the units can be further processed at a $200,000 total additional cost and be converted into 5,800 units of Product B and 11,200 units of Product C. Per unit selling price for Product B is $104 and for Product C is $59. 1. Prepare an analysis that shows whether the 21,000 units of Product A should be processed further or not? Sell as is Process Further Sales Relevant costs: Total relevant costs Income (loss) Incremental net income (or loss) if processed further The company should
Division A has the capacity to produce 120,000 units. The normal selling price of each unit is P80. The variable cost incurred for each unit is P42. Total direct fixed cost for the relevant range is P1,150,000. Division B can use the products of Division A as an input in its manufacturing process but is currently acquiring the said products from an outside supplier. The price per unit is P75. Total annual demand is 30,000 units. Assuming sufficient capacity, what is the minimum acceptable transfer price to Division A? Assuming only 22,500 excess capacity, what is the minimum acceptable transfer price to Division A? Assuming only 22,500 excess capacity and that Division A can avoid variable selling cost per unit of P4 but will incur a one-time fixed cost of P30,000 for the order, what is the minimum acceptable transfer price to Division A? Assuming no excess capacity, what is the minimum acceptable transfer price to Division A? What is the maximum acceptable transfer…
Company XYZ is conducting an engineering economic analysis to decide whether to make vs purchase position for a necessary element needed ins several products. Now the engineering department has established this information: Option A to purchase 10,000 units annually at a fixed price of $8.50 per unit. The cost of placing the order is insignificant as per the present cost accounting procedure. Option B to manufacture 10,000 units annually with a direct labor cost of $1.50 per unit, manufacturing overhead cost is allotted at 200% of direct labor (which is $3.00 per unit) ) and Direct materials cost at $5.00 per unit. Based on the information, should the unit be purchased or manufactured?
Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 15,300 units. Southeastern estimates its annual holding cost for this item to be $23 per unit. The cost to place and process an order from the supplier is $74. The company operates 300 days per year, and the lead time to receive an order from the supplier is 2 working days. a) What is the economic order quantity? units (round your response to the nearest whole number).
The annual demand for a particular chemical product is 1,200 units. Suppose that the annualholding cost is $24 per unit, and the ordering cost is $100.Part A: Find the optimal order quantity based on EOQ analysis, and calculate the combinedannual ordering and holding cost.Part B: Now suppose that the store manager finds out that the demand has been underestimated.Specifically, the correct annual demand is 1,500 units. On the other hand, due to operationalrestrictions she cannot change the order quantity and thus use the same order size from part A.How much this error cost the store? (This can also be considered as a penalty for parametermisestimation).
Jones Limited is planning to manufacture item ABC that will be used in the food industry. The product will be sold for RM15.00 per kilo. The company expects the following unit costs to apply to the production of item ABC: Ingredient M1: 0.25 kilos @ RM2.00 per kilo Ingredient M2: 0.75 kilos @ RM3.00 per kilo Labour: 0.20 hours @ RM4.00 per hour Variable overhead 0.20 hours @ RM6.00 per hour Fixed overheads are expected to be RM6,600 per annum and are absorbed on a unit basis and will accrue evenly over the year. Actual fixed overhead cost of RM6,600 and fixed selling expenses of RM900 were incurred for the quarter ending 31 March 2023. The planned production and sales levels for the first quarter of year ending 31 March 2023 are as follows: Production (units) Sales (units) 0.50 2.25 0.80 1.20 Quarter 1 1100 800 The actual production levels for the first quarter are similar to the planned production levels. The company had no stocks of raw materials or finished goods on 1 January 2023.…
Division A has the capacity to produce 120,000 units. The normal selling price of each unit is P80. The variable cost incurred for each unit is P42. Total direct fixed cost for the relevant range is P1,150,000. Division B can use the products of Division A as an input in its manufacturing process but is currently acquiring the said products from an outside supplier. The price per unit is P75. Total annual demand is 30,000 units. 1. Assuming sufficient capacity, what is the minimum acceptable transfer price to Division A? 2. Assuming only 22,500 excess capacity, what is the minimum acceptable transfer price to Division A? 3. Assuming no excess capacity, what is the minimum acceptable transfer price to Division A? 4. What is the maximum acceptable transfer price to Division B?
Magnificent Modems has excess production capacity and is considering the possibility of making and selling security tokens. The following estimates are based on a production and sales volume of 1,000 security tokens. Unit-level manufacturing costs are expected to be $20. Sales commissions will be established at $1 per unit. The current facility-level costs, including depreciation on manufacturing equipment ($60,000), rent on the manufacturing facility ($50,000), depreciation on the administrative equipment ($12,000), and other fixed administrative expenses ($71,950), will not be affected by the production of the security tokens. The chief accountant has decided to allocate the facility-level costs to the existing product (modems) and to the new product (security tokens) on the basis of the number of units of product made (i.e., 5,000 modems and 1,000 security tokens). Required a. Determine the per-unit cost of making and selling 1,000 security tokens. Note: Do not round intermediate…