Sensitivity of E0Q to changes in relevant ordering and carrying costs, cost of prediction error. Alpha Company's annual demand for its only product, XT-590, is 10,000 units. Alpha is currently analyzing possible combinations of relevant carrying cost per unit per year and relevant ordering cost per purchase order, depending on the company's choice of supplier and average levels of inventory. This table presents three possible combinations of carrying and ordering costs. Relevant Carrying Cost per Unit per Year Relevant Ordering Cost per Purchase Order $10 $400 $20 $200 S40 $100

Sensitivity of E0Q to changes in relevant ordering and carrying costs, cost of prediction error. Alpha Company's annual demand for its only product, XT-590, is 10,000 units. Alpha is currently analyzing possible combinations of relevant carrying cost per unit per year and relevant ordering cost per purchase order, depending on the company's choice of supplier and average levels of inventory. This table presents three possible combinations of carrying and ordering costs. Relevant Carrying Cost per Unit per Year Relevant Ordering Cost per Purchase Order $10 $400 $20 $200 S40 $100

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 5CE: Refer to Cornerstone Exercise 3.4 for data on Dohini Manufacturing Companys purchasing cost and...

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give insight into the impact of changes in relevant ordering and carrying costs on EOQ and annual relevant total costs? Explain briefly.
Please help me answer c and d
Suppose the relevant carrying cost per unit per year was $20 and the relevant ordering cost per purchase order was $200. Suppose further that Alpha calculates EOQ after incorrectly estimating relevant carrying cost per unit per year to be $10 and relevant ordering cost per purchase order to be $400. Calculate the actual annual relevant total costs of Alpha’s EOQ decision. Compare this cost to the annual relevant total costs that Alpha would have incurred if it had correctly estimated the relevant carrying cost per unit per year of $20 and the relevant ordering cost per purchase order of $200 Calculate and comment on the cost of the prediction error.
The ABC co.is planning to stock new product. The ABC co.has developed thefollowing information:Annual usage = 5400 unitsCost of the product = 365 MU/unitOrdering cost = 55 MU/orderCarrying cost = 28%/year of inventory value helda) Determine the optimal number of units per order?b) Find the optimal number of orders/year?c) Find the annual total inventory cost? Please mention formulas and do it in detail so I can understand.
Given: Peter Piper has projected sales of 72,000 pipes this year, ordering cost of P6 per order, and carrying costs of P2.40 per pipe. With the given data, can you give me the solution on how to get: -What is the economic ordering quantity? -Total inventory cost at EOQ -How many orders will be placed during the year?-What will the average inventory be? Thank you in advance.
1. Calculate Economic Order Quantity (EOQ), number of orders, annual ordering costs, annual carrying costs and total inventory costs from the following:Annual consumption: 6000 unitsCost of placing one Order: RO 60Carrying cost per unit: RO 22. Find out the EOQ, Annual ordering cost and annual holding cost from the following information. The demand is 19500 units per year, holding cost is RO 4 per unit for a year and ordering cost is RO 25 order. 3. Find out the ordering cost from the following information, Annual demand is 240 units, holding cost RO 4 per unit for a year and EOQ is 60 units.4. If the price of the material is RO 15 per unit and the annual consumption is 4000 units, the interest and store keeping charges are 20% of the value and the cost of placing of an order and receiving the goods is RO 60, how much material should be ordered at one time? 5. Alexander pump LLC uses about 75000 valves per year and the usage is fairly constant at 6250 unitsper month. The valve cost of…
can you help me answer A.
Draw and explain EOQ chart with the following data: Requirements per year = 1600 units, Ordering cost = Rs. 100/- per order, Carrying cost = Rs. 5/- per unit, Purchase cost = Rs. 80/- per cost. Assume the missing data.
When prices are rising (inflation), which costing method would produce the highest value for gross margin? Choose between first-in, first-out (FIFO); last-in, first-out (LIFO); and weighted average (AVG). Evansville Company had the following transactions for the month. Calculate the gross margin for each of the following cost allocation methods, assuming A62 sold just one unit of these goods for $10,000. Provide your calculations. A. first-in, first-out (FIFO) B. last-in, first-out (LIFO) C. weighted average (AVG)
When prices are falling (deflation), which costing method would produce the highest gross margin for the following? Choose first-in, first-out (FIFO); last-in, first-out (LIFO); or weighted average, assuming that B62 Company had the following transactions for the month. Calculate the gross margin for each of the following cost allocation methods, assuming B62 sold just one unit of these goods for $400. Provide your calculations. A. first-in, first-out (FIFO) B. last-in, first-out (LIFO) C. weighted average (AVG)
Refer to Cornerstone Exercise 3.4 for data on Dohini Manufacturing Companys purchasing cost and number of purchase orders. The controller for Dohini Manufacturing ran regression on the data, and the coefficients shown by the regression program are: Required: 1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate. 2. If Dohini Manufacturing Company estimates that next month will have 430 purchase orders, what is the total estimated purchasing cost for that month? (Round your answer to the nearest dollar.) 3. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and expects 5,340 purchase orders? What will estimated total purchasing cost be? (Round your answer to the nearest dollar.) What is the total fixed purchasing cost? Why doesnt it equal the fixed cost calculated in Requirement 1?
6. Carrying Costs vs. Ordering Costs Based on an EOQ analysis, the optimal order quantity is 4,000 units. Annual inventory carrying costs equal 30% of the average inventory level. The company pays P 10 per unit to buy the product and P 400 to place an order. The monthly demand for the product is 5,000 units. REQUIRED: Determine the following: A) Annual inventory carrying costs. B) Annual inventory ordering costs. C) Total inventory costs.