Net Steels is a steel manufacturing company. It currently orders 180 metric tons of raw material per order. It wasobserved that the company often faces stockout. To tackle this issue, the company incorporated a fixed-quantity system(FQS) and collected the following data. The lead time is 2 weeks.DemandOrder CostItem CostInventory-Holding Cost10000 metric tons per year$17000 per order$38000 per year20 percent per yearAssuming there are 50 weeks a year, determine the reorder point. Only for non-integer results, round your answer UPto the nearest integer. For example, if your answer is 5.05, type 6; if your answer is 5, type 5.2DCOEconomic Order Quantity (EOQ), Q* =CnReorder point, r =demand rate x lead timeYour Answer:Answer

Step 1 Economic order quantity (EOQ) is the ideal order quantity a entity should purchase to…

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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 2CE: Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An...

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Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An order to replenish the part requires a lead time of five days. Required: 1. Calculate the reorder point, using Equation 20.3. 2. Graphically display the reorder point, where the vertical axis is inventory (units) and the horizontal axis is time (days). Show two replenishments, beginning at time zero with the economic order quantity in inventory. 3. What if the average usage per day of the part is 500 units but a daily maximum usage of 575 units is possible? What is the reorder point when this demand uncertainty exists?
Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month with the following unit costs: Fixed overhead per unit = 280,000/40,000 units produced = 7. Total fixed factory overhead is 280,000 per month. During October, 38,400 units were sold at a price of 24, and fixed marketing and administrative expenses were 130,500. Required: 1. Calculate the cost of each unit using absorption costing. 2. How many units remain in ending inventory? What is the cost of ending inventory using absorption costing? 3. Prepare an absorption-costing income statement for Pattison Products, Inc., for the month of October. 4. What if November production was 40,000 units, costs were stable, and sales were 41,000 units? What is the cost of ending inventory? What is operating income for November?
Bolger and Co. manufactures large gaskets for the turbine industry. Bolgers per-unit sales price and variable costs for the current year are as follows: Bolgers total fixed costs aggregate to 360,000. Bolgers labor agreement is expiring at the end of the year, and management is concerned about the effects of a new labor agreement on its break-even point in units. The controller performed a sensitivity analysis to ascertain the estimated effect of a 10-per-unit direct labor increase and a 10,000 reduction in fixed costs. Based on these data, the break-even point would: a. decrease by 1,000 units. b. decrease by 125 units. c. increase by 375 units. d. increase by 500 units.
Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid 28,000 per year and is able to process 4,000 purchase orders. Last year, 17,800 purchase orders were processed by the five agents. Required: 1. Calculate the activity rate per purchase order. 2. Calculate, in terms of purchase orders, the: a. total activity availability b. unused capacity 3. Calculate the dollar cost of: a. total activity availability b. unused capacity 4. Express total activity availability in terms of activity capacity used and unused capacity. 5. What if one of the purchasing agents agreed to work half time for 14,000? How many purchase orders could be processed by four and a half purchasing agents? What would unused capacity be in purchase orders?
2. The ABC Company consumes inventory of 67,500 units of components per year. The carrying cost per unit is RO 1.50. The fixed order cost is RO 25 per order. The production planning is 365-day year. a. What is the Economic Order Quantity (EOQ)? Interpret. 219 S b. Calculate and interpret the optimal number of orders to be placed. the ida c. If it takes five days to receive an order from suppliers, at what inventory level should ABC Company place another order.Interpret.
Dambo Limited has prepared the following cost analysis for 6 months of trading.Sales (units) 2 500Price $ 1000 per unitMaterials costs $ 200 per unitLabour costs $150 per unitOther variable costs $150 per unitOverheads $1,000,000 for 6 months operationa) Determine the break-even quantity, and Break even in Rs b) Identify the firm's margin of safety in units for the period.c) Calculate the profit made during the period? d) How much units the company should sell if the company wants to make a profit of $ 500,000 for the next six months. ?
Bang Inc has the following cost details: per kg. Material cost= 200 Direct labour= 40 Direct variable overhead= 20 Fixed production charges for the year on normal working capacity of 2 lakh kgs is 20 lakhs. 4,000 kgs of finished goods are in stock at the year end. Find Value of inventory per kg of finished goods.
M. P. VanOyen Manufacturing has gone out on bid for a regulator component. Expected demand is 700 units per month. The item can be purchased from either Allen Manufacturing or Baker Manufacturing. Their price lists are shown in the table. Ordering cost is $50.00, and annual holding cost per unit is $5.00. Allen Mfg. Baker Mfg. Quantity Unit Price Quantity Unit Price 1-499 $16.00 1-399 $16.10 500-999 15.50 400-799 15.60 1000+ 15.00 800+ 15.10 a) What is the economic order quantity if price is not a consideration? nothing units (round your response to the nearest whole number). b) Which supplier, based on all options with regard to discounts, should be used? ▼ Baker Mfg. Allen Mfg. c) What is the optimal order quantity and total annual cost of ordering,…
The data below pertain to the forecasts of XYZ Company for the upcoming year. Total Cost Unit Cost Sales (40,000 units) $1,000,000 $25 Raw materials 160,000 4 Direct labor 280,000 7 Manufacturing overhead: Variable 80,000 2 Fixed 360,000 Selling and general expenses: Variable 120,000 3 Fixed 225,000 Assuming that XYZ Company sells 80,000 units, what is the maximum that can be paid for an advertising campaign while still breaking even?
Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 15,300 units. Southeastern estimates its annual holding cost for this item to be $23 per unit. The cost to place and process an order from the supplier is $74. The company operates 300 days per year, and the lead time to receive an order from the supplier is 2 working days. a) What is the economic order quantity? units (round your response to the nearest whole number).
Snipe Company has been purchasing a component, Part Q, for $19.20 per unit. Snipe is currently operating at 70% of capacity, and no significant increase in production is anticipated in the near future. The cost of manufacturing a unit of Part Q is estimated as follows: Direct materials $11.50 Direct labor 4.50 Variable factory overhead 1.12 Fixed factory overhead 3.15 Total $20.27 Prepare a differential analysis report dated March 12 of the current year. Round your answers to two decimal places. If an amount is zero, enter "0". Differential Analysis Make (Alternative 1) or Buy (Alternative 2) Part Q March 12 Make Buy Differential Part Q Part Q Effects (Alternative 1) (Alternative 2) (Alternative 2) Unit costs: Purchase price v 19.20 X 19.20 Direct materials v 11.50 X Direct labor v Variable factory overhead v Fixed factory overhead y Total unit costs
Snipe Company has been purchasing a component, Part Q, for $19.20 per unit. Snipe is currently operating at 70% of capacity, and no significant increase in production is anticipated in the near future. The cost of manufacturing a unit of Part Q is estimated as follows: Direct materials $11.50 Direct labor 4.50 Variable factory overhead 1.12 Fixed factory overhead 3.15 Total $20.27 Prepare a differential analysis report dated March 12 of the current year. Round your answers to two decimal places. If an amount is zero, enter "0". Differential Analysis Make (Alternative 1) or Buy (Alternative 2) Part Q March 12 MakePart Q(Alternative 1) BuyPart Q(Alternative 2) DifferentialEffects(Alternative 2) Unit costs: $fill in the blank 35fe7afa507606f_2 $fill in the blank 35fe7afa507606f_3 $fill in the blank 35fe7afa507606f_4 fill in the blank 35fe7afa507606f_6 fill in the blank 35fe7afa507606f_7 fill in the blank 35fe7afa507606f_8…