A manufacturer has a production facility that requires 19,111 units of component JY21 per year. Following a long-term contract, the manufacturer purchases component JY21 from a supplier with a lead time of 6 days. The unit purchase cost is $12.8 per unit. The cost to place and process an order from the supplier is $113 per order. The unit inventory carrying cost per year is 20 percent of the unit purchase cost. The manufacturer operates 250 days a year. Assume EOQ model is appropriate. What is the optimal total annual inventory and purchase cost for the manufacturer? Use at least 4 decimal places.

A manufacturer has a production facility that requires 19,111 units of component JY21 per year. Following a long-term contract, the manufacturer purchases component JY21 from a supplier with a lead time of 6 days. The unit purchase cost is $12.8 per unit. The cost to place and process an order from the supplier is $113 per order. The unit inventory carrying cost per year is 20 percent of the unit purchase cost. The manufacturer operates 250 days a year. Assume EOQ model is appropriate. What is the optimal total annual inventory and purchase cost for the manufacturer? Use at least 4 decimal places.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Sleepwell LLC has entered into a contract to supply 50,000 units of sleeping mattes to customer on sale or return basis at OMR 60 each. The cost of making each sleeping mattress is 32 OMR. The term of sales provides three months to customer for the date of sale to return the items and get a full refund. The experience indicates that such customer tends to return back some items and it can be reliably estimated to be around 8% of such sold items are usually returned. find right of return assets. OMR 3,000,000 OMR 240,000 None of them OMR 128,000 Solve PC issues 1 important messag 3 total messages 03:43 EN
Division Y has asked Division X of the same company to supply it with 6,600 units of part L763 this year to use in one of its products. Division Y has received a bid from an outside supplier for the parts at a price of $41 per unit. Division X has the capacity to produce 26,400 units of part L763 per year. Division X expects to sell 23,760 units of part L763 to outside customers this year at a price of $43.60 per unit. To fill the order from Division Y, Division X would have to cut back its sales to outside customers. Division X produces part L763 at a variable cost of $33 per unit. The cost of packing and shipping the parts for outside customers is $2 per unit. These packing and shipping costs would not have to be incurred on sales of the parts to Division Y. Required: a. What is the range of transfer prices within which both the Divisions' profits would increase as a result of agreeing to the transfer of 6,600 parts this year from Division X to Division Y? Note: Round your final…
A manufacturer has a production facility that requires 14,979 units of component JY21 per year. Following a long-term contract, the manufacturer purchases component JY21 from a supplier with a lead time of 14 days. The unit purchase cost is $27 per unit. The cost to place and process an order from the supplier is $172 per order. The unit inventory carrying cost per year is 17 percent of the unit purchase cost. The manufacturer operates 250 days a year. Assume EOQ model is appropriate. What is the optimal length of inventory cycle in days? Use at least 4 decimal places.
Division Y has asked Division X of the same company to supply it with 5,600 units of part L763 this year to use in one of its products. Division Y has received a bid from an outside supplier for the parts at a price of $36 per unit. Division X has the capacity to produce 22,400 units of part L763 per year. Division X expects to sell 20,160 units of part L763 to outside customers this year at a price of $37.60 per unit. To fill the order from Division Y, Division X would have to cut back its sales to outside customers. Division X produces part L763 at a variable cost of $28 per unit. The cost of packing and shipping the parts for outside customers is $2 per unit. These packing and shipping costs would not have to be incurred on sales of the parts to Division Y. Required: a. What is the range of transfer prices within which both the Divisions' profits would increase as a result of agreeing to the transfer of 5,600 parts this year from Division X to Division Y? (Round your final answers…
Mostera manufactures two components A & B. There are to be 5000 of each component manufactured next year. The following information is available for each unit of A&B. Machine Hrs Variable CostUnit of A 4 25Unit of B 6 34 A total of 30,000 machine hours are available.A sub-contractor is willing to supply Monstera with units of A & B for P27 and P38 respectively. Advise Monstera whether to make or buy.
Division Y has asked Division X of the same company to supply it with 8,400 units of part L763 this year to use in one of its products. Division Y has received a bid from an outside supplier for the parts at a price of $50 per unit. Division X has the capacity to produce 33,600 units of part L763 per year. Division X expects to sell 30,240 units of part L763 to outside customers this year at a price of $54.40 per unit. To fill the order from Division Y, Division X would have to cut back its sales to outside customers. Division X produces part L763 at a variable cost of $42 per unit. The cost of packing and shipping the parts for outside customers is $2 per unit. These packing and shipping costs would not have to be incurred on sales of the parts to Division Y. Required: a. What is the range of transfer prices within which both the Divisions' profits would increase as a result of agreeing to the transfer of 8,400 parts this year from Division X to Division Y? (Round your final answers…
Division Y has asked Division X of the same company to supply it with 9,000 units of part L763 this year to use in one of its products. Division Y has received a bid from an outside supplier for the parts at a price of $53 per unit. Division X has the capacity to produce 36,000 units of part L763 per year. Division X expects to sell 32,400 units of part L763 to outside customers this year at a price of $58.00 per unit. To fill the order from Division Y, Division X would have to cut back its sales to outside customers. Division X produces part L763 at a varlable cost of $45 per unit. The cost of packing and shipping the parts for outside customers is $2 per unit. These packing and shipping costs would not have to be incurred on sales of the parts to Division Y. Required: a. What is the range of transfer prices within which both the Divisions' profits would increase as a result of agreeing to the transfer of 9,000 parts this year from Division X to Division Y? (Round your final answers…
Advance Auto purchases a component used in the manufacture of automobile generators directly from the supplier. Advance Auto’s generator production operation, which is operated at a constant rate will require 1000 components per month throughout the year (12,000 units annually). Assume the ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding costs are 20% of the value of the inventory. Advance Auto has 250 working days per year and a lead time of 5 days. Answer the following inventory policy questions: What is the EOQ for this component? What is the reorder point? What is the cycle time? What are the total annual holding and ordering costs associated with your recommended EOQ?
Southeastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 15,300 units. Southeastern estimates its annual holding cost for this item to be $23 per unit. The cost to place and process an order from the supplier is $74. The company operates 300 days per year, and the lead time to receive an order from the supplier is 2 working days. a) What is the economic order quantity? units (round your response to the nearest whole number).
Suppose that a manufacturer plans to produce 78,000 units of product duringa year. A lot of size L, to be determined, is to be made periodically, andevery time a lot is made, it is necessary to set up the appropriate machineryand other production facilities before production starts. The set up cost is thena fixed cost incurred for each lot produced and it is determined as $ 200. Whenproduction commences , the cost of making a unit is constant at $ 7.5 per unit.Inventory cost is to be determined on the basis that it costs $ 0.50 per year tocarry one unit in inventory. Also find how many lots the manufacturerwould make per year and each lot would be produced in how manydays ?.
Qinto Company sells two types of products, basic and deluxe. The company provides technical support for users of its products at an expected cost of $250,000 per year. The company expects to process 10,000 customer service calls per year. 1. Determine the company’s cost of technical support per customer service call. 2. During the month of January, Qinto received 650 calls for customer service on its deluxe model and 150 calls for customer service on its basic model. Assign technical support costs to each model using activity-based costing (ABC).
Rizal Co. consigns 30 hardware products to Bonifacio Co. on January 1, 20x1. The unit cost per hardware product is P8,000. Rizal pays P3,000 in transporting the hardware product to Bonifacio Co. At month-end, Bonifacio remits P230,000 for the sale of 14 hardware products, after deducting the following: 15% commission based on selling price Freight out Installation costs P20,000 6,000 REQUIRED: 1. Net income recognized by Rizal Co. on the consignment 2. Carrying amount of inventory to be reported in Rizal's balance sheet