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.

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.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 8E: Melchar Company uses 78,125 pounds of oats each year. The cost of placing an order is 18, and the...

See similar textbooks

Related questions

Q: I'm waiting for Answer

A: To calculate the Economic Order Quantity (EOQ), use the following formula:EOQ = Square Root of [(2 *…

Q: How much did the owner withdraw during the year?

A: Step 1: DefinitionsConcept of Owner's Equity:Owner's Equity is the owner's residual interest in the…

Q: Assume that markup is based on cost. Find the dollarmarkup and percent markup on cost for the…

A: Step 1: DefinitionsConcept of Markup (Dollar Markup): Markup is the amount added to the cost price…

Q: I am looking for help with this general accounting question using proper accounting standards.

A: To calculate the total depreciation expense over the 8-year life of the CNC machine using…

Q: Accounting?

A: Step 1: Definition of Tax LiabilityTax liability is the total amount of tax that an individual,…

Q: Please provide the accurate answer to this general accounting problem using appropriate methods.

A: Step 1: Definition of Realized Gain or LossA realized gain or loss on the sale of an asset is the…

Q: Net income will increase by

A: To solve this problem, we use the formula for the percentage change in profits based on the degree…

Q: Can you solve this general accounting question with the appropriate accounting analysis techniques?

A: Concept of Construction Cost:Construction cost refers to the total amount spent on building a fixed…

Q: General Account

A: Step 1: Calculate 2016 NOPATNOPAT = Total Revenue × Net Operating Profit Margin (NOPM)Given:Total…

Q: Portman Solutions paid out $42.5 million in total common dividends and reported $150.3 million of…

A: Explanation of Retained Earnings: Retained earnings represent the cumulative portion of a company's…

Q: Please show me the valid approach to solving this financial accounting problem with correct methods.

A: Step 1: Definition of Return on Assets (ROA)Return on Assets (ROA) is a financial ratio that shows…

Q: I need assistance with this general accounting question using appropriate principles.

A: Step 1: Definition of Fixed CostFixed costs are expenses that remain constant regardless of the…

Q: Xavi Industries has two production departments with distributed production overhead of $15,000 for…

A: Explanation of Departmental Overhead Rate:A departmental overhead rate is the overhead cost assigned…

Q: no chatgpt solve it

A: The first step in calculating the applied overhead is to determine the predetermined overhead rate.…

Q: A machine has a cost of $18,500, an estimated residual value of $4,500, and an estimated useful life…

A: To calculate accumulated depreciation at the end of the second year using the straight-line…

Q: Ultra Core Mining Ltd. acquired mineral rights for $48,000,000. The mineral deposit is estimated at…

A: Step 1: Definitions Concept of Depletion:Depletion is the process of allocating the cost of a…

Q: Need answer

A: Step 1: Definition of Variable Overhead CalculationsActual Variable Overhead Rate (AVOR): The actual…

Q: Can you explain this general accounting question using accurate calculate methods ?

A: The return on equity (ROE) is calculated using the following formula:ROE = Net Income / Average…

Q: Walsh plc sells wash machines and provides a one-year warranty against faults occurring after sale.…

A: (a) Distinctions Between Liabilities, Provisions, and Contingent Liabilities under IAS 37IAS 37…

Q: I am trying to find the accurate solution to this general accounting problem with the correct…

A: Step 1: Definition of Degree of Operating Leverage (DOL)Degree of Operating Leverage (DOL) measures…

Q: Need help this question

A: Step 1: Definition of Cost of Goods Sold (COGS) AdjustmentThe Cost of Goods Sold (COGS) Adjustment…

Q: What is the percent change in operating.

A: Given:Degree of operating leverage = 3.5% change in sales = 23% Formula:Percentage change in…

Q: Hello, can u give correct Answer

A: Concept of Net Income:Net Income represents the total profit a company earns after subtracting all…

Q: Quick answer of this accounting

A: Step 1: Definition of Return on Assets (ROA)Return on Assets (ROA) is a key financial metric used to…

Q: Solve this Accounting problem

A: Explanation of Contribution Margin:Contribution margin is the amount remaining from sales revenue…

Q: Financial accounting question

A: Step 1: Define Operating Cash FlowOperating cash flow (OCF) refers to the amount of cash generated…

Q: During its first year, Cypress Manufacturing, Inc., showed a $40 per unit profit under absorption…

A: Step 1: Definitions Concept of Absorption Costing:Absorption Costing includes all manufacturing…

Q: On January 1 of the current year, Piper Company issues a 4-year, non-interest-bearing note with a…

A: A non-interest-bearing note is a type of debt instrument that does not pay interest to the holder.…

Q: None

A: The predetermined overhead rate (POHR) is calculated using the following formula:POHR = Estimated…

Q: Please answer me fast expert

A: The total equity of a company represents the residual interest of the owners in the business after…

Q: What was its total assets turnover ratio on these financial accounting question?

A: Step 1: Definition of Total Assets Turnover Ratio (TATO)The Total Assets Turnover Ratio (TATO) is a…

Q: Provide Solutions of this Question

Q: None

A: To calculate the Economic Order Quantity (EOQ) for item Z, follow these steps:Given:Annual demand…

Q: Help this accounting questions answer

A: We can calculate the amount of fixed assets sold using the following formula: Fixed Assets Sold =…

Q: Financial accounting

A: Step 1: Define Contribution MarginThe contribution margin is calculated as the difference between…

Q: Determine the predetermined overhead rate for 2019

A: To calculate the predetermined overhead rate, the formula is: Predetermined Overhead Rate =…

Q: On January 1, 2015, Accounts Receivable was $45,000. Sales on accountfor 2015 totaled $186,000. The…

A: Step 1: DefinitionsConcept of Accounts Receivable: Accounts receivable represents the amount owed to…

Q: Lao Enterprises is preparing its direct labor budget for June. Projections for the month are that…

A: STEP 1: Determine the estimated total direct labor hours for the budgeted units to be produced of…

Q: Aquila Enterprises began the year with total liabilities of $120,000 and stockholders' equity of…

A: Step 1: Definitions Concept of Stockholders' Equity:Stockholders' Equity represents the owners'…

Q: What is the amount of cash paid for interest in 2017?

A: The note payable issued by Yarrow Company has a 10% annual interest rate and a one-year term,…

Q: Solve qn no ai

A: 1.1.13 Accounting: What governs the allocation of joint product costs at the split-off point?Correct…

Q: Please explain the solution to this financial accounting problem using the correct financial…

A: Step 1: Definition of Operating LeverageOperating leverage measures the percentage change in net…

Q: What is the depreciation rate?

A: Explanation of Units of Production (UOP) Depreciation: Units of Production depreciation is an…

Q: No Ai Answer

A: Concept of Assets:Assets are the resources owned by a business that have economic value and are…

Q: Can you solve this general accounting problem using accurate calculation methods?

A: Below is a step‐by‐step illustration of one common approach to valuing the firm and then extracting…

Q: During September, the assembly department completed 10,500 units of a product that had a standard…

A: Definition of Materials Price Variance:Materials price variance is the difference between what was…

Q: Hello tutor ! need assistant but no AI

A: Let's go step by step to prepare the contribution approach income statement and calculate the…

Q: Subject: general accounting

A: Return on Assets (ROA) is a financial ratio that measures how efficiently a company uses its assets…

Q: Hello tutor please give answer asap for this accounting problems

A: Step 1: Definition of Recognized GainRecognized Gain refers to the portion of realized gain that is…

Q: Compute the cost per unit

A: Explanation of Direct Materials:Direct materials are raw materials that can be physically and…

Question

No Ai

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.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Provide Accurate Answer
You purchase lubricating oil in 55-gallon
Determine the EOQ
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. Solve this Accounting problem
Preparing an order and receiving a shipment of lubricant costs
Subject: Accounting
I want answer with all working format
Solve this financial accounting problem
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. $61,000
A hardware store sells paint that has a demand of 9,706 gallons per year. The store purchases the paint from a supplier for 11.2 dollars per gallon The unit holding cost per year is 24 percent of the unit purchase cost. while the ordering cost is 175 dollars per order. The paint supplier has a lead time of 10 days. What is the annual ordering cost if the store uses the order quantity of 2,103 gallons per order? Assume EOQ model is appropriate. Use at least 4 decimal places.
Given the following data solve for the eoq time