2. A sports coliseum annually sells large quantities of soft drinks and beer inplastic cups, with the name of the coliseum and the various team logos onthem. The local container cup manufacturer that supplies the cups in boxesof 100 has offered the coliseum management the following discount priceschedule for cups:Order Quantity (boxes)Price (Pesos) per Box2,000 - 6,9992,3507,000 - 11,9992,15012,000 - 19,9992,05020,000+1,900With an annual demand for cups of 2.3 million, an annual carrying costper box of cups of P 95, and an ordering cost of P 16000, determine theoptimal order quantity and total annual inventory cost.

Optimal order quantity refers to the number of units to be ordered at one go in order to get the…

Answered: With an annual demand for cups of 2.3…

With an annual demand for cups of 2.3 million, an annual carrying cost per box of cups of P 95, and an ordering cost of P 16000, determine the optimal order quantity and total annual inventory cost.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

2. A sports coliseum annually sells large quantities of soft drinks and beer in
plastic cups, with the name of the coliseum and the various team logos on
them. The local container cup manufacturer that supplies the cups in boxes
of 100 has offered the coliseum management the following discount price
schedule for cups:
Order Quantity (boxes)
Price (Pesos) per Box
2,000 - 6,999
2,350
7,000 - 11,999
2,150
12,000 - 19,999
2,050
20,000+
1,900
With an annual demand for cups of 2.3 million, an annual carrying cost
per box of cups of P 95, and an ordering cost of P 16000, determine the
optimal order quantity and total annual inventory cost.

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