Use the following information to answer questions 11 and 12: Friedrich’s Bakery (“Friedrich’s”) bakes and sells bread and biscuits. Friedrich uses a lot of freerange eggs (“eggs”) in his bakery and is trying to figure out what the most economic order quantity will be. Friedrich estimated that he will need on average 80 eggs per day for the 250 days that he intends to bake during the 2021 financial year. He also calculated that it costs him R0,05 per egg per annum to keep the eggs fresh and safely stored. Friedrich is requiring a return of 10% per annum on his investment in the business and purchases the eggs at R3,00 each. His friend, Tsakane, gives Friedrich a discounted rate of R50 ordering cost for each order that Friedrich places at Tsakane Farming. Friedrich buys all the required eggs exclusively from Tsakane Farming and incurs no internal ordering costs other than the discounted cost per order charged by Tsakane. Tsakane Farming uses custom-made packaging cartons that are not similar to the traditional half-adozen or full-dozen size egg cartons. As such, Tsakane’s packaged eggs per order are therefore not necessarily divisible by six. QUESTION 11 The budgeted Economic Order Quantity (EOQ) for eggs is. (1) 6 325 (2) 11 547 (3) 1 690,31 (4) 2 391
Use the following information to answer questions 11 and 12:
Friedrich’s Bakery (“Friedrich’s”) bakes and sells bread and biscuits. Friedrich uses a lot of freerange eggs (“eggs”) in his bakery and is trying to figure out what the most economic order quantity
will be. Friedrich estimated that he will need on average 80 eggs per day for the 250 days that he
intends to bake during the 2021 financial year. He also calculated that it costs him R0,05 per egg
per annum to keep the eggs fresh and safely stored. Friedrich is requiring a return of 10% per
annum on his investment in the business and purchases the eggs at R3,00 each.
His friend, Tsakane, gives Friedrich a discounted rate of R50 ordering cost for each order that
Friedrich places at Tsakane Farming. Friedrich buys all the required eggs exclusively from Tsakane
Farming and incurs no internal ordering costs other than the discounted cost per order charged by
Tsakane.
Tsakane Farming uses custom-made packaging cartons that are not similar to the traditional half-adozen or full-dozen size egg cartons. As such, Tsakane’s packaged eggs per order are therefore
not necessarily divisible by six.
QUESTION 11
The budgeted Economic Order Quantity (EOQ) for eggs is.
(1) 6 325
(2) 11 547
(3) 1 690,31
(4) 2 391
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