Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operat
1 answer:
Answer: Please find answers below
Explanation:
(a) Economic order quantity EOQ =
= =
= 194.99 units
(b) Average number of units = Economic order quantity / 2
= 194.99 / 2
= 97.496 units
(c) Optimal number of orders = Annual Demand / Economic order quantity
= 5,900units / 194.99 units =30.26
(d) Optimal number of days between two orders = Number of working days / Optimal number of orders
= 250 days / 30.26
= 8.26
Total ordering cost = Cost per order X Number of orders
= $29 X 30.26
= $ 877.54
Total holding cost = Average inventory X carrying cost per unit
= 194.99 /2 X $9
= $877.455
(e) Annual cost of ordering and holding inventorY =Total ordering cost + Total carrying cost
= $ 877.54 + $877.455
= $ 1,754.995 ≈ $1,755
(f) Total annual inventory cost =Total ordering cost +Total holding cost + Actual cost of 5900 units at $102 per unit
= $ 877.54 + $877.455 + (5,900 x 102) = $1754.995 +601,800= $603,554.995≈$603,555
Total annual inventory cost =Total ordering cost +Total holding cost + Actual cost of 6000 units at $102 per unit
= $ 877.54 + $877.455 + (6000 x 102) = $1754.995 +612,000= $613,754.995≈$613,755
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Answer and Explanation:
The computation of the cost od merchandised sold for each sale and the inventory balance after each sale is presented in the attachment below;
The perpetual inventory is the system which updated the inventory as on a regular basis
While on the other hand, the weighted average cost method is the method in which the average cost is calculated after each every purchase is made
In the calculation below:
1. The weighted average cost of $30.90 come from
= (Total inventory cost) ÷ (Total quantity)
= ($180,000 + $1,674,000) ÷ (60,000 units)
= $30.90
1. The weighted average cost of $31.60 come from
= (Total inventory cost) ÷ (Total quantity)
= ($463,500 + $674,100) ÷ (36,000 units)
= $31.60
