Economic Order Quantity (EOQ): Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size. To compute: The optimum order quantity using EOQ model.

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Answer 1

Question

Chapter 20, Problem 20.33P

1.

To determine

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

To compute: The optimum order quantity using EOQ model.

2. a.

To determine

To compute: The number of order per year.

2.b.

To determine

To compute: The annual relevant total cost of ordering and carrying inventory.

3.

To determine

To compute: The optimum order quantity using EOQ model, the annual relevant total cost of ordering and carrying inventory.

4.

To determine

To explain: The cost impact on the company of excluding opportunity cost of carrying inventory when making EOQ decisions. Explain the reason of excluding the opportunity cost of carrying inventory when evaluating manager performance and also specify method to company to encourage manger to make decision more congruent with the goal of reducing total inventory cost.

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General accounting

The Bubba Company uses the gross profit method to estimate inventory and cost of goods sold for interim reporting purposes. The average gross profit rate is 25% of sales. The following data relate to the month of May: Inventory cost, May 1 $ 30,000 Purchases during the month at cost $ 80,400 Sales $ 1,00,800 $3,600 Sales returns Using the data above, what is the estimated ending inventory on May 31? A. $24,300 B. $25,200 C. $34,800 D. $37,500

What is the change in gross profit from 2014 to 2015 ?

Answer 2

Question

Chapter 20, Problem 20.33P

1.

To determine

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

To compute: The optimum order quantity using EOQ model.

2. a.

To determine

To compute: The number of order per year.

2.b.

To determine

To compute: The annual relevant total cost of ordering and carrying inventory.

3.

To determine

To compute: The optimum order quantity using EOQ model, the annual relevant total cost of ordering and carrying inventory.

4.

To determine

To explain: The cost impact on the company of excluding opportunity cost of carrying inventory when making EOQ decisions. Explain the reason of excluding the opportunity cost of carrying inventory when evaluating manager performance and also specify method to company to encourage manger to make decision more congruent with the goal of reducing total inventory cost.

Expert Solution & Answer

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Answer 3

Question

Chapter 20, Problem 20.33P

1.

To determine

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

To compute: The optimum order quantity using EOQ model.

2. a.

To determine

To compute: The number of order per year.

2.b.

To determine

To compute: The annual relevant total cost of ordering and carrying inventory.

3.

To determine

To compute: The optimum order quantity using EOQ model, the annual relevant total cost of ordering and carrying inventory.

4.

To determine

To explain: The cost impact on the company of excluding opportunity cost of carrying inventory when making EOQ decisions. Explain the reason of excluding the opportunity cost of carrying inventory when evaluating manager performance and also specify method to company to encourage manger to make decision more congruent with the goal of reducing total inventory cost.

Expert Solution & Answer

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Answer 4

Question

Chapter 20, Problem 20.33P

1.

To determine

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

To compute: The optimum order quantity using EOQ model.

2. a.

To determine

To compute: The number of order per year.

2.b.

To determine

To compute: The annual relevant total cost of ordering and carrying inventory.

3.

To determine

To compute: The optimum order quantity using EOQ model, the annual relevant total cost of ordering and carrying inventory.

4.

To determine

To explain: The cost impact on the company of excluding opportunity cost of carrying inventory when making EOQ decisions. Explain the reason of excluding the opportunity cost of carrying inventory when evaluating manager performance and also specify method to company to encourage manger to make decision more congruent with the goal of reducing total inventory cost.

Expert Solution & Answer

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Answer 5

Chapter 20, Problem 20.33P

1.

To determine

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

To compute: The optimum order quantity using EOQ model.

2. a.

To determine

To compute: The number of order per year.

2.b.

To determine

To compute: The annual relevant total cost of ordering and carrying inventory.

3.

To determine

To compute: The optimum order quantity using EOQ model, the annual relevant total cost of ordering and carrying inventory.

4.

To determine

To explain: The cost impact on the company of excluding opportunity cost of carrying inventory when making EOQ decisions. Explain the reason of excluding the opportunity cost of carrying inventory when evaluating manager performance and also specify method to company to encourage manger to make decision more congruent with the goal of reducing total inventory cost.

Answer 6

Chapter 20, Problem 20.33P

1.

To determine

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

To compute: The optimum order quantity using EOQ model.

Answer 7

Chapter 20, Problem 20.33P

1.

To determine

Economic Order Quantity (EOQ):

Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.

To compute: The optimum order quantity using EOQ model.

Answer 8

2. a.

To determine

To compute: The number of order per year.

Answer 9

2. a.

To determine

To compute: The number of order per year.

Answer 10

2.b.

To determine

To compute: The annual relevant total cost of ordering and carrying inventory.

Answer 11

2.b.

To determine

To compute: The annual relevant total cost of ordering and carrying inventory.

Answer 12

3.

To determine

To compute: The optimum order quantity using EOQ model, the annual relevant total cost of ordering and carrying inventory.

Answer 13

3.

To determine

To compute: The optimum order quantity using EOQ model, the annual relevant total cost of ordering and carrying inventory.

Answer 14

4.

To determine

To explain: The cost impact on the company of excluding opportunity cost of carrying inventory when making EOQ decisions. Explain the reason of excluding the opportunity cost of carrying inventory when evaluating manager performance and also specify method to company to encourage manger to make decision more congruent with the goal of reducing total inventory cost.

Answer 15

4.

To determine

To explain: The cost impact on the company of excluding opportunity cost of carrying inventory when making EOQ decisions. Explain the reason of excluding the opportunity cost of carrying inventory when evaluating manager performance and also specify method to company to encourage manger to make decision more congruent with the goal of reducing total inventory cost.

Answer 16

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Answer 17

Expert Solution & Answer

Answer 18

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Answer 19

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Solution Summary: The author explains that economic order quantity is the quantity of order that is purchased from supplier at a time to reduce the carrying and ordering cost of inventory.

To compute: The number of order per year.

To compute: The annual relevant total cost of ordering and carrying inventory.

To compute: The optimum order quantity using EOQ model, the annual relevant total cost of ordering and carrying inventory.

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Chapter 20 Solutions