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MaRussiya [10]
3 years ago
9

An electronics firm produces 45,000 calculators annually, and each calculator requires 2 nickel-cadmium batteries (so they use 9

0,000 batteries per year). The batteries are purchased from a local supplier for $0.14 each, and the supplier charges $250 each time a delivery is made. The annual storage cost is $0.046 per battery, and the cost of capital (i.e., opportunity cost) is 10% per year.
A. What is the annual holding cost per battery (incliding storage cost and cost of capital)?
B. What is the annual inventory cost associated with the batteries if the firm orders 15,000 batteries at a time?
C. What is the economic order quantity?
A. 17,503.
B. 20,194.
C. 27,386.
D. 30,000.
Business
1 answer:
Mila [183]3 years ago
8 0

Answer:

A.

$0.05

B.

$18,600

C.

30,000 units

Explanation:

Economic order quantity is the quantity at which business incur minimum cost. This is the level of order where the holding cost equals to the ordering cost of the business.

As per given data

Annual Demand = 90,000 batteries

Ordering cost = $250

Carrying cost = $0.046

A.

Annual Holding cost = Holding cost per unit x Annual Demand  = $0.046 x 90,000 batteries = $4,140

Opportunity cost = $0.046 X 110% = $0.05

B.

Purchase cost = 90,000 x $0.14 = $12,600

Ordering cost = (90,000/15,000) x $250 = $1,500

Storage cost = $0.05  x 90,000 = $4,500

Total cost of Inventory = $12,600 + $1,500 + $4,500 = $18,600

C.

EOQ =  \sqrt{\frac{2 X S X D}{H} }

EOQ = \sqrt{\frac{2 X 250 X 90000}{0.05} }

EOQ = 30,000

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Allison engines corporation has established a target capital structure of 40 percent debt and 60 percent common equity. the firm
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Variance analysis Jack Joe, Inc. standard costing provided below. During 20x1, Jack Joe Inc. used 410,000 of raw materials to pr
ICE Princess25 [194]

Answer:

1) Direct material price variance= -5,000 or $5,000 unfavorable

2) Direct material quantity variance= $5,000 unfavorable

3) Actual price= $0.5122

Explanation:

Giving the following information:

Units produced= 200,000

Units sold= 200,000

Direct material used= 410,000

Standard quantity= 2 units of raw material

Budgeted cost= $0.5 per raw material unit

Total Raw material variance= $10,000 unfavorable

First, we need to calculate the direct material quantity variance:

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (400,000 - 410,000)*0.5

Direct material quantity variance= $5,000 unfavorable

Now, we can determine the direct material price variance:

Total direct material varaince= Direct material quantity variance + direct material price variance

10,000= -5,000 +

direct material price variance= -5,000 or $5,000 unfavorable

Finally, we can calculate the actual price per raw material unit:

Direct material price variance= (standard price - actual price)*actual quantity

-5,000= (0.5 - actual price)*410,000

-5,000= 205,000 - 410,000actual price

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$0.5122=actual price

7 0
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