answer quickly EOQ and LEAN ACCOUNTING In-Class Illustration #1XYZ, Inc. expects to sell 180,000 units of itsproduct next year. The cost to purchase a unit is $44.00. The selling price is $80.00 per unit; salescommission is 10%. The clerical cost to place an order totals $15.00. The purchasing manager drawsa salary of $60,000.00 per year. Obsolescence insurance costs $5.00 per unit per year for theweighted average number of units on hand. When units are acquired, the transportation fee is$50.00 per shipment, plus $1.00 per unit. The firm's cost of capital is 12%. Annual depreciation onthe warehouse building amounts to $15,000.00. XYZ's demand for its product is uniform throughoutthe year and the supplier takes two days to deliver when an order is placed. Required:A. Determine the optimal number of units the firm should order each time it places an order.B. Based on 'A' above, what are the total relevant ordering and carrying costs the firm should expectto incur during the next year?

SOLUTION- FORMULA- EOQ= 2DS / H D= DEMAND S= ORDERING COST H= CARRYING COST

Answered: EOQ and LEAN ACCOUNTING In-Class…

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter4: Preparing And Using Financial Statements

Section: Chapter Questions

Problem 3EP

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