The Best Furniture company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Ordering costs per purchase order Carrying costs per year P15,000 P300 per unit Annual demand is 20,000 packages per year. The quantity per order equals 1,000 units. What is the total annual ordering and holding costs? P450,000 P25,000 P300,000 P150,000

The Best Furniture company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Ordering costs per purchase order Carrying costs per year P15,000 P300 per unit Annual demand is 20,000 packages per year. The quantity per order equals 1,000 units. What is the total annual ordering and holding costs? P450,000 P25,000 P300,000 P150,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A company has 52 week per year operation. The weekly demand is for product it needs is 20 units and it costs OMR 2500 per unit to purchasedThe cost of reordering is OMR 50 each order. The annual holding cost is OMR 500 per unitWhich economic order quantity policy, either round-up or round down for inventory ordering to be used here to minimize total inventory cost per year? The corresponding order quantity will be: a. None is correct B. 15 C. 13 d. 12 e. 14
Wheels & Deals Limited uses 60,000 batteries each year in its production of motorcycles at a costof $450 per battery. The cost of placing an order is $75.00. The cost of holding one unit ofinventory for one year is 0.5% of the unit purchase price. Currently, Wheels & Deals Limited places12 orders of 5,000 batteries per year. Compute the cost Wheels & Deals’ current inventory policy. Isthis the minimum cost? Explain.
You are asked to manage the purchases of potatoes (10 kgs per bag). The annual demand = 1200 bags, Deliveredpurchase cost = 30/bags, Annual carrying cost percentage= 10percent, Order cost = 50/order. The lead time is 5 working days. Assuming 24 working days per month. 5.1 Determine the Economic Order Quantity 5.2 Determine the reorder point 5.3 Determine the average inventory5.4 Suppose orders are placed only at review time. Find the optimal period and the optimal orderquantity.
15
An automobile parts supplier sell Excel brand batteries to van dealers. The annual demand is approximately 1,000 batteries. The supplier pays RO 20 for each battery and estimates that the annual holding cost is 30 percent of the battery’s value. It costs approximately RO 10 to place an order. The supplier currently orders 20 batteries per month. Determine the economic order quantity. a. 57.74 units b. 28.28 units c. 28.82 units d. 82.82 units
The Titan Company provides you with the following information for the current year: Revenues = $2,000,000Cost of goods sold = $750,000 (2/3 of this amount varies with the number of units produced)S&A costs = $200,000 (1/2 of this amount is fixed)Selling price = $40 per unit The company sold 50,000 units of their product in the current year. The company expects unit sales of their product to increase 20% in the next year. Based on the information above, what would be the expected increase to profit before taxes in the coming year?
Firm Tezla produces the product QuickCar. Annual demand for QuickCar is 600600 units per year on a continuous basis. The product has inventory holding costs of $30$30 per unit per year and order costs of $300$300 per order. It takes 3030 days to receive a shipment after an order is placed. Calculate the economic order quantity (EOQ). a. 7777 units b. 110110 units c. 6060 units d. 4444 units
Olive Corporation buys a material for P20 per unit Sixteen thousand parts a year are needed Carrying cost is P3.00 per unit and the ordering cost is P15 Compute the economic order quantity
Zack Co. sells three sizes of bags: small, medium, and large. The company has annual fixed costs of P19,520,000. For the past several years, 20% of Hugo's sales have been the small and large bags with the remaining 60% being the medium size. Zack Co. does not expect this to change in the upcoming year. The following information is also available for each of the bags: Small Medium Large Sales price per unit P400 P700 P1,750 Variable costs per unit 150 200 450 Required: How many total bags does the company need to produce and sell in order to break even? How many medium bags need to be sold in order to break even? If Zack experiences a higher demand of large bags than it anticipated, will the break-even point increase, decrease, or stay the same? Why?
pioneer limited purchased a product which has a steady monthly demand of 20 000 units. the product cost R100 per unit. the ordering cost is R5 per order. The holding cost is 10% of the unit purchase price. What is the annual order quantity?
REQUIRED- Vallie Enterprise sells a product that cost $200 per unit and has a monthly demand of 500 units. The annual holding cost per unit is calculated as 2% of the unit purchase price. It costs the business $30 to place a single order. The maximum number of units sold for any one week is 150 and minimum sales 80 units. The vendor takes anywhere from 2 to 4 weeks to deliver the merchandise after the order is placed. The EOQ model is appropriate. i) What is the cost minimizing solution for this product each year? ii)Determine the re-order level, minimum inventory level and maximum inventory level for theproduct
Rahul