Answer:
a) Optimal lot size = 1,118.03
b) Annual total cost = $46.51
Explanation:
As per the data given in the question,
a) Daily holding cost = $50 × 24% ÷ 300 = $0.04
Optimal lot size = Sqrt (2 × Demand rate × Setup cost ÷ (Daily holding cost × ( 1 - Demand rate ÷ Production cost)))
= Sqrt(2 × 100 × $200 ÷ ($0.04 × (1 - 20 ÷ 100)))
= $1,118.03
b) If the production rate is ignored then optimal lot size :
= Sqrt (2 × 20 × $200 ÷ 1)
= 89.44
Annual total cost = Setup cost+ holding cost
= (Demand rate ÷ Optimal lot size) × Setup cost + (Optimal lot size ÷ 2) × holding cost
= (20 ÷ 89.44) × $200 + 89.44 ÷ 2 ×$0.04
= $44.72 + $1.79
= $46.51
Answer:
Option (B) is correct.
Explanation:
Expected value for option A:
= High amount × Probability + Low amount × Probability
= $90,000 × 0.5 + $25,000 × 0.5
= $57,500
Expected value for option B:
= High amount × Probability + Low amount × Probability
= $80,000 × 0.4 + $70,000 × 0.6
= $74,000
Expected value for option C:
= High amount × Probability + Low amount × Probability
= $60,000 × 0.3 + $55000 × 0.7
= $56,500
Therefore, option (B) would be the answer.
B, you don’t have enough profit
Answer:
Explanation:
The journal entry is shown below:
Work in Process-Molding A/c Dr $3,000
To Accounts Payable Control $3,000
(Being the purchase and used production is recorded)
The computation of the purchase amount is shown below:
= Number of kgs purchased × price per kg
= 500 kgs × $60
= $3,000
The other information which is given is not considered. Thus, ignored it