i. The cost of placing an order. ii. The cost of carrying inventory as a percentage of inventory iii. The carrying cost as a percentage of the total inventory value
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QUESTION TWO
a) The Chisokone Company located in Chimwemwe manufactures typewriters called AK4 model
Z. The company has an average total inventory of K15, 000,000 and places 12,000 orders every
year. Order details are as follows:
Purchase department expenses……………………………..K400, 000
Stores warehouse personnel salary……………………......K400, 000
Obsolescence, spoilage, etc…………………………………K120, 000
Floor space charge related to stores activities…………….K260, 000
Cost of collecting materials…………………………………..K60, 000
Cost of receiving materials…………………………………...K70, 000
Cost of Inspection……………………………………………..K100, 000
Cost of material handling for warehousing activities………K300, 000
Cost of bill payment……………………………………………K170, 000
Interest…………………………………………………………..11.5%
Insurance charges………………………………………………1.9%
The company wants to buy a certain component, whose cost is K24 each and the annual
requirement is 34,560 units. Calculate the following:
i. The cost of placing an order.
ii. The cost of carrying inventory as a percentage of inventory
iii. The carrying cost as a percentage of the total inventory value.
iv. The economic order quantity.
Step by step
Solved in 2 steps
- Q6. Calculate the total packing and shipping costs for the month of May relating to: ora Sam's Mart Company Activity Cost per Unit of Activity Driver Customer relations per month Selling Accounting Warehousing d. All of the above Packing Shipping Per customer Per sales dollar Per order Per unit shipped Per unit shipped Per pound shipped The following information pertains to Sam's Mart activities in Minnesota for the month of May: Number of orders Sales revenue Cost of goods sold 200 $160,000 $95,000 $100.00 0.06 5.00 0.50 0.25 0.20 a $50 and $40 b. $5,400 and $90,000 c. $1,350 and $18,000 d. $23,850 and $19,080 Number of customers 25 Units shipped Pounds shipped 5,400 90,000 = 5 008.822((A 001.AT2 TS Pailing (5400* (25) Shipping (90,000 1,350 =2Knowledge Check 01 Match the term and the definition. 1. Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n). of selling a tour package. is a cost that is incurred to support a number of cost objects but cannot be 2 A traced to them individually 3. Adventure Holiday sells thousands of tour packages each month through its various branches A branch manager's salary would be a(n) of the branchPlease give me step by step directions. Ch 26 pro 7 Product Costs using Activity Rates Nozama.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted cost of the sales order processing activity is $540,000 and 60,000 sales orders are estimated to be processed. a. Determine the activity rate of the sales order processing activity.$ ________________________per sales order b. Determine the amount of sales order processing cost that Nozama.com would receive if it had 45,000 sales orders_________________________________.
- Problem 1. Mahinahon Company would like to institute an activity-based costing system to price products. The company's Purchasing Department incurs costs of P550,000 per year and has six employees. Purchasing has determined the three major activities that occur during the year. Activity Allocation Measure # of People Total Cost Issuing purchase orders # of purchase orders 1 P285,000 Reviewing receiving reports # of receiving reports 2 P190,000 Making phone calls # of phone calls 3 P220,000 During the year, 50,000 phone calls were made in the department; 15,000 purchase orders were issued; and 10,000 shipments were received. Product A required 200 phone calls, 150 receiving reports, and 50 purchase orders. Product B required 350 phone calls, 400 receiving reports, and 100 purchase orders. 1Determine the amount of purchasing department cost that should be assigned to each of these products. 1.2. Determine purchasing department cost per…! Required information SB Exercise E8-5 to E8-10 [The following information applies to the questions displayed below.] CCk my work Shadee Corporation expects to sell 590 sun shades in May and 360 in June. Each shade sells for $146. Shadee's beginning and ending finished goods inventories for May are 80 and 45 shades, respectively. Ending finished goods inventory for June will be 65 shades. E8-7 (Algo) Preparing Direct Labor and Manufacturing Overhead Budgets [LO 8-3d] Suppose that each shade takes three direct labor hour to produce and Shadee pays its workers $13 per hour. Additionally, Shadee's fixed manufacturing overhead is $8,000 per month, and variable manufacturing overhead is $10 per unit produced. Required: 1. Prepare Shadee's direct labor budget for May and June. 2. Prepare Shadee's manufacturing overhead budget for May and June. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare Shadee's direct labor budget for May and June. Note:…CASE 5 Cool Stuff, Inc. uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days usage in inventory. Required: (PLEASE ANSWER 4 TO 7 ONLY) 4. Determine the number of orders. 5. How much is the total carrying cost? 6. How much is the total ordering cost? 7. How much is the total cost of inventory 8. What will be your advice to the management?
- 8. Day Mail Order Co. applied the high-low method of cost estimation to customer order data for the first four months of 2020. What is the estimated variable order filing cost component per order? Orders 1,200 1,300 1,800 1,700 Costs Р3,120 3,185 January February March 4,320 3,895 April а. Р2.00 b. P2.42 с. Р2.48 d. P2.50 e. None of these; answer isFigure 2 Hapsburg Manufacturing purchases components produced by Little Company in the manufacture of its main product. For the next year, Hapsburg expects to use a total of 20,000 parts. Hapsburg typically orders 2,000 units at a time. The cost of placing an order is GHS100, and the average annual cost of carrying one unit of inventory is GHS5. 18. Refer to Figure 2. Hapsburg's total ordering cost is a. GHS1,000. b. GHS5,000. c. GHS10,000. d. GHS500.Time remaining: 00:08:51 Accounting The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company’s products is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year. The company has provided the following data: ProductDemand Next year (units)Selling Price per UnitDirect MaterialsDirect LaborDebbie74,000$ 25.50$ 5.10$ 3.85Trish66,000$ 5.20$ 2.00$ 1.12Sarah59,000$ 33.00$ 10.04$ 5.95Mike40,000$ 17.00$ 4.40$ 4.55Sewing kit349,000$ 10.40$ 5.60$ 0.77 The following additional information is available: The company’s plant has a capacity of 152,800 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products. The direct labor rate of $7 per hour is expected to remain unchanged during the coming year. Fixed manufacturing costs total $625,000 per year. Variable overhead costs are $3 per direct labor-hour. All of…
- Assume the following information for a merchandising company: Number of units sold 20,000Selling price per unit $ 30Variable selling expense per unit $ 3.6Variable administrative expense per unit $ 2.6Fixed administrative expenses $ 50,000Beginning merchandise inventory $ 24,000Ending merchandise inventory $ 19,000Merchandise purchases $ 340,000 What is the contribution margin?CARNING SYSTEM (ACADEMI entory Management - Spring21 Time left 1:39:43 XYZ Company is specialized in mangoes distribution in the city of Muscat. Sales are 400 boxes (unit) per month. It costs. OR 10 to make and receive an order and holding cost is OR 3.5 per box per year. The prices depend on quantities ion purchased such that the order quantities from 1 to 199 at a unit price RO 5; quantity 200 to 499 at a unit price 4.5 RO; and quantity 500 and more at a per unit price of 4 RO. If the discount option is considered, then the best decision that minimizes the total annual inventory cost is ut of O a 200 units. Total cost=27,240 O b. 500 units. Total cost = 20.171 O c. 450 units. Total cost = 23,500 O d. Noneis correct O e. 185 units, Total cost= 30,649 NEXT PAGE EVIOUS PAGEThe following data pertains to Western Company’s materials inventory: Number of pounds required annually 16,000 Cost of placing an order P20 Annual carrying cost per pound of material P4What is the EOQ?
