You purchase lubricating oil in 55-gallon drums and consume an average of 642 drums per year. Preparing an order and receiving a shipment of lubricant costs $7 per order. Annual carrying costs are $73 per drum. Determine the EOQ.
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- Electric spark Co., uses 60,000 of component Zima. The cost of placing an order is estimated at $17.28 per order. The annual holding cost is 20% of the purchase price of $20 per unit. The following information is provided to you by the management accountant to use in your analysis: The Normal usage 200 units per day Maximum usage 280 units per day Minimum usage 120 units per day Reorder period 20 to 30 days Required: 1. Determine the EOQ using the equation method 2. Calculate the total cost of inventory per year, in case the company decided to use the EOQ. 3. Electric spark has been offered a 2 per cent discount on the cost if it places orders in quantities of 20,000. Discuss whether the company should accept the discount and place larger orders .ACME Company purchases for resale 1,000 widgets for $64 each. At year- end, the replacement cost is $63 per widget, the estimated selling price is $68 per widget, the disposal cost is $7 per widget, and the estimated markup is $10 per widget.[General Account] If ACME uses LCM costing by item, at what amount will the widgets be reported on the balance sheet? a. $63,000 b. $51,000 c. $64,000 d. $62,500 e. $61,000Rugged Outfitters purchases one model of mountain bike at a wholesale cost of $520 per unit and resells it to end consumers. The annual demand for the company’s product is 49,000 units. Ordering costs are $500 per order and carrying costs are $100 per bike per year, including $40 in the opportunity cost of holding inventory. Q. Compute the optimal order quantity using the EOQ model.
- Given the following, calculate the net price of the purchase by a customer who buys 1,000 cases of product and pays the supplier within 15 days of shipment. What is the total percentage discount on the sale? Cost of product: $75.00 per case Trade discount: $5.00 per case Quantity discount: 1.5% for each 500 cases Performance allowance: 5% Cash discount: 2/10, net 30Rugged Outfitters purchases one model of mountain bike at a wholesale cost of $520 per unit and resells it to end consumers. The annual demand for the company’s product is 49,000 units. Ordering costs are $500 per order and carrying costs are $100 per bike per year, including $40 in the opportunity cost of holding inventory. Q. Compute (a) the number of orders per year and (b) the annual relevant total cost of ordering and carrying inventory.A flower shop uses 230 clay pots a month. The pots are purchased for $2 each. Annual holding cost is estimated to be 25 percent of purchase cost, and ordering cost is $18 per order. The manager has been using an order quantity of 230 flower pots. a. Calculate the EOQ. (Round the final answer to the nearest whole number.) EOQ pots b. Calculate the EOQ's total annual inventory control cost. (Round the final answer to 2 decimal places.) TC $ c. What additional annual inventory control cost is the shop incurring by using the current order quantity? (Round the final answer to 2 decimal places.) Additional cost $
- Novak Corp. began the year with 8 units of marine floats at a cost of $11 each. During the year, it made the following purchases: May 5, 34 unit at $16; July 16, 17 units at $21; and December 7, 22 units at $25. Assume there are 29 units on hand at the end of the period. Novak uses the periodic approach. What is the average cost of cost of good sold: $__The annual demand for an item is 20,000 units. The cost to process an order is $25 and the annual inventory holding cost is $4 per item per year. Given the following price-quantity breaks for purchasing the item: Quantity Price 1-1,999 $2.50 per unit 2,000 or more $2.40 per unit What is the quantity you will order each time? Please provide detailed calculation of the total cost (including inventory cost and purchasing cost) for each quantity discount scenario.EOQ? CALCULATE