Calculate the annual economic order quantity from the attached provided below GM Electronics expects to sell 800 alarm systems each month of 2022 at R4 000 each. The cost price of eachalarm system is R2 000. The inventory holding cost of an alarm system is 1% of the unit cost price. The cost ofplacing an order for the alarm systems is estimated at R60.

Economic order quantity - EOQ = square root of 2 ×(annual demand × ordering cost) / annual…

to sell 800 alarm systems each month of 2022 at R4 000 each. The cost price of each The inventory holding cost of an alarm system is 1% of the unit cost price. The cost of alarm systems is estimated at R60.

to sell 800 alarm systems each month of 2022 at R4 000 each. The cost price of each The inventory holding cost of an alarm system is 1% of the unit cost price. The cost of alarm systems is estimated at R60.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter7: The Master Budget And Flexible Budgeting

Section: Chapter Questions

Problem 10Q: If the sales forecast estimates that 50,000 units of product will be sold during the following year,...

See similar textbooks

Related questions

Q: Identify and write out the equations for four profitability ratios.

A: Profitability ratios state the efficiency of the company in turning revenue into profits. Company…

Q: What is the standard cost income statement? Give an example?

A: Meaning of Standard cost income statement:A standard cost is the estimated cost of production based…

Q: Quick assets divided by current liabilities is the: Select one: a.Current ratio. b.Working capital…

A: Quick assets are the highly liquid assets that include all the current assets except inventory and…

Q: Discuss some financial variables that affect the price-earnings ratio?

A: The price-Earning Ratio refers to the ratio between earning per share and the current market price…

Q: Define basic earning power (BEP) ratio

A: The formula to compute basis earning power ratio as follows:

Q: Define the term Annual operating cost:?

A: MEANING OF OPERATING COST The sum total of operating expenses and cost of goods sold is called…

Q: What is the formulae used to find markup price?

A: Markup price is the price that the player comes up with after adding the mark up to the cost price…

Q: Compare gross working capital and net working capital.

A: Introduction: Working capital can be defined as the capital that represents the operating liquidity…

Question

100%

Calculate the annual economic order quantity from the attached provided below

GM Electronics expects to sell 800 alarm systems each month of 2022 at R4 000 each. The cost price of each
alarm system is R2 000. The inventory holding cost of an alarm system is 1% of the unit cost price. The cost of
placing an order for the alarm systems is estimated at R60.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Calculate the annual economic order quanitity from the information provided attached
Mix Electronics purchases 2,400,000 units per year of a component with a purchase price of P50. The fixed cost is P15 per order, and the carrying cost is 30% of the purchase price.a. Calculate the EOQ.b. Calculate the EOQ if the order cost is zero. c. Calculate the EOQ if the order cost is P10 per order.d. What is the implication to the firm if there is a decrease in the order cost?
Ziga Company manufactures lamps and expects to sell 350,000 units in 2022 at P21 per unit. Planned per unit manufacturing costs at the level of production are as follows: Variable manufactuing costs P9.00 Fixed manufacturing costs 5.00 Earning in 2020, a new customer approaches Ziga Co. offers to buy 15,000 lamps at P11.00 per unit. Ziga can produce additional units with no change in fixed manufacturing cost or per unit variable cost. The only additional fixed cost for this order is for packing and shipping, estimated at P30,000. Required: Determine whether Ziga should accept the special order (filling the special order will not affect the regular sales). What is the total profit of Ziga if the special order is accepted. Show supporting computations. If the new customer’s offer to buy 15,000 lamps is accepted, what is the minimum price per unit charge by Ziga if the company expects a profit of…
H&M chief demand planner has estimated that 9250,000 units of clothing sold in 2021.H&M cost of placing and processing an ordee is R250 ,while the annual cost of holding a unit in its didtribution center is projected at 5% of the unit purchase price.Both costs are expected to be constant for the foreseeable future.on average H&M sells a unit of clothing for R300 at cost plus 50%.Orders are received two weeks after being placed with the supplier.Assume 365 day year and that demand is constant throughout the year.Calculate the economic order quantity?
Hi Tech Corporation (HTC) expects to order 295,000 memory chips for inventory during the coming year, and it will use this inventory at a constant rate. Fixed ordering costs are $300 per order; the purchase price per chip is $32; and the firm’s inventory carrying costs is equal to 18 percent of the purchase price. What is the economic ordering quantity for chips?
A moped manufacturing company needs 100,000 units of moped tires for its production per year. The carrying costs of these tires are 10 per unit per year. Fixed ordering cost is 400. What is the optimal number of units should the company order each time in order to minimize total inventory cost? At this optimal quantity, how often should the company order its moped tires? Assume a 365-day year.
The annual demand for a certain product is 11,340 units. The company informs you that every time an order is placed for this product the cost per order incurred is £100. You are also told that the cost of holding one unit fora year is £0.7. What is the economic order quantity of the product?
Use the information provided below to calculate the economic order quantity (expressed to the next whole number). INFORMATION Savoy Traders intends purchasing 19 200 watches at R80 each in the next year. The watches will be sold for R120 each at a steady rate during the year. The cost of placing a single order for the watches amounts to R24. The inventory holding cost amounts to 10% of the unit purchase price.
The quarterly demand for an item of raw materials is estimated at 2,000 units at a purchase price of GH¢180 per unit. It is estimated that the cost per order will be GH¢270 and the cost of holding a unit of material in inventory will be GH¢24.Required:i. Compute the optimal order quantity, and total minimum costs.ii. Suppose a supplier offers 5% quantity discount for purchase of 8,000 units, should the offer be accepted
Items purchased from a vendor cost $20 each, and the forecast for next year’s demand is 1,000 units. If it costs $5 every time an order is placed for more units and the storage cost is $4 per unit per year, a. What quantity should be ordered each time? b. What is the total ordering cost for a year? c. What is the total storage cost for a year?
7. HEA ltd sells 2,000 bags of cement each year. It is estimated that the cost of holding one bag of cement for a year is £4. The cost of placing an order for new inventories is estimated at £250. Based on the case scenario, what is the economic order quantity (EOQ)? A 354 bags B 500 bags C 8 bags D 1,000 bags
Yulo Company plans to sell 400,000 laundry hangers. The fixed costs are P600,000, and the variable cost is 40% of the selling price. If the company wants to realize a profit of P120,000, the selling price of each laundry hanger must be: