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Suppose that a manufacturer plans to produce 78,000 units of product during a year. A lot of size L, to be determined, is to be made periodically, and every time a lot is made, it is necessary to set up the appropriate machinery and other production facilities before production starts. The set up cost is then a fixed cost incurred for each lot produced and it is determined as $ 200. When production commences , the cost of making a unit is constant at $ 7.5 per unit. Inventory cost is to be determined on the basis that it costs $ 0.50 per year to carry one unit in inventory. Also find how many lots the manufacturer would make per year and each lot would be produced in how many days ?.

Suppose that a manufacturer plans to produce 78,000 units of product during a year. A lot of size L, to be determined, is to be made periodically, and every time a lot is made, it is necessary to set up the appropriate machinery and other production facilities before production starts. The set up cost is then a fixed cost incurred for each lot produced and it is determined as $ 200. When production commences , the cost of making a unit is constant at $ 7.5 per unit. Inventory cost is to be determined on the basis that it costs $ 0.50 per year to carry one unit in inventory. Also find how many lots the manufacturer would make per year and each lot would be produced in how many days ?.

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 15E
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Suppose that a manufacturer plans to produce 78,000 units of product during
a year. A lot of size L, to be determined, is to be made periodically, and
every time a lot is made, it is necessary to set up the appropriate machinery
and other production facilities before production starts. The set up cost is then
a fixed cost incurred for each lot produced and it is determined as $ 200. When
production commences , the cost of making a unit is constant at $ 7.5 per unit.
Inventory cost is to be determined on the basis that it costs $ 0.50 per year to
carry one unit in inventory. Also find how many lots the manufacturer
would make per year and each lot would be produced in how many
days ?.

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