Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Question
Chapter 2, Problem 2P
a.
To determine
Compute the order point of M Company.
b.
To determine
Compute the economic order quantity.
c.
To determine
Calculate the order cost and carrying cost at the EOQ point.
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P3-3 Aeon Laketown predicts that 10,000 units of materials will be used during the year.
The expected daily usage is 40 units. The expocted lead time is 6 days, and there is a
safety stock of 300 units. Aeon expects that the cost of materials will be P480 per unit. It
anticipales that it will cost P200 to place each order. The annual carrying cost is P1.00 per.
unit.
Required:
a. Calculate the order poinl.
b. Calculate the economic order quantity.
. Calculate the total ordering and carrying costs at EOQ point.
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The production department of Zan Corporation has submitted the following forecast of units to be produced by quarter for the
upcoming fiscal year:
Units to be produced
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
12,000
15,000
14,000
13,000
In addition, 15,000 grams of raw materials inventory is on hand at the start of the 1st Quarter and the beginning accounts payable for
the 1st Quarter is $6,200.
Each unit requires 5 grams of raw material that costs $1.80 per gram. Management desires to end each quarter with an inventory of
raw materials equal to 25% of the following quarter's production needs. The desired ending inventory for the 4th Quarter is 5,000
grams. Management plans to pay for 60% of raw material purchases in the quarter acquired and 40% in the following quarter. Each unit
requires 0.40 direct labor-hours and direct laborers are paid $13.50 per hour.
Required:
1. and 2. Calculate the estimated grams of raw material that need to be purchased and the cost of raw material…
Chapter 2 Solutions
Principles of Cost Accounting
Ch. 2 - What are the two major objectives of materials...Ch. 2 - Prob. 2QCh. 2 - What factors should management consider when...Ch. 2 - Prob. 4QCh. 2 - What kind of information and data are needed to...Ch. 2 - How would you define the term economic order...Ch. 2 - What kind of information and data are needed to...Ch. 2 - What factors should be considered when determining...Ch. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Proper authorization is required before orders for...Ch. 2 - Prob. 13QCh. 2 - Prob. 14QCh. 2 - Prob. 15QCh. 2 - Prob. 16QCh. 2 - Prob. 17QCh. 2 - Normally, a manufacturer maintains an accounting...Ch. 2 - Prob. 19QCh. 2 - Why do companies adopt the LIFO method of...Ch. 2 - Prob. 21QCh. 2 - Prob. 22QCh. 2 - Prob. 23QCh. 2 - Prob. 24QCh. 2 - Prob. 25QCh. 2 - Prob. 26QCh. 2 - Prob. 27QCh. 2 - Prob. 28QCh. 2 - A manufacturing process may produce a considerable...Ch. 2 - After a product is inspected, some units may be...Ch. 2 - Order Point Pershing, Inc. expects daily usage of...Ch. 2 - Economic order quantity; order cost; carrying cost...Ch. 2 - Economic order quantity; order cost; carrying cost...Ch. 2 - Journalizing materials requisitions Penrose...Ch. 2 - Recording materials transactions Prepare a journal...Ch. 2 - PurrChems raw materials records contained the...Ch. 2 - Using first-in, first-out perpetual inventory...Ch. 2 - LIFO costing Using last-in, first-out perpetual...Ch. 2 - Using the weighted average method of perpetual...Ch. 2 - Prob. 10ECh. 2 - Renfro, Inc. was franchised on January 1, 2016. At...Ch. 2 - Recording materials transactions Craig Products...Ch. 2 - Recording materials transactions Broadwell...Ch. 2 - JIT and cost control Matsui Industries produces...Ch. 2 - Kenkel, Ltd. uses backflush costing to account for...Ch. 2 - For E2-15, prepare any journal entries that would...Ch. 2 - Davis Co. uses backflush costing to account for...Ch. 2 - For E2-17, prepare any journal entries that would...Ch. 2 - A machine shop manufactures a stainless steel part...Ch. 2 - Spoiled work Roger Company manufactures tennis...Ch. 2 - Defective work Herbert Electronics manufactures an...Ch. 2 - Perry Co. predicts it will use 25,000 units of...Ch. 2 - Prob. 2PCh. 2 - Economic order quantity; tabular computation Lopez...Ch. 2 - In P2-3, assume that the company desires a safety...Ch. 2 - Inventory costing methods The purchases and issues...Ch. 2 - Inventory costing methods The following...Ch. 2 - Terrills Transmissions uses a job order cost...Ch. 2 - Prob. 8PCh. 2 - Tuscany Products, Inc. uses a job order cost...Ch. 2 - Prob. 10PCh. 2 - JIT and cost control Langray, Ltd. produces 50,000...Ch. 2 - Backflush costing Russell Corp. uses backflush...Ch. 2 - Webster Company uses backflush costing to account...Ch. 2 - An examination of Buckhorn Fabricators records...Ch. 2 - One of the tennis rackets that Ace Sporting Goods...Ch. 2 - Lloyd Industries manufactures electrical equipment...Ch. 2 - Review Problem for Chapters 1 and 2 UltraLift...Ch. 2 - Financial and Nonfinancial Aspects of Changing to...Ch. 2 - Prob. 2MC
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