Wesley Utility Company uses 2,500 units per year which it stores at $0.50 per unit per annum. The cost to place an order is $100. a) Calculate: i. The economic order quantity (EOQ) b) If the company decides to make the items on its own machine with a potential capacity of 5,000 units per year, calculate: i. The economic order quantity (EOQ) ii. The annual ordering cost iii. The annual carrying cost

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Wesley Utility Company uses 2,500 units per year
which it stores at $0.50 per unit per annum. The cost
to place an order is $100.
a) Calculate:
i. The economic order quantity (EOQ)
b) If the company decides to make the items on its
own machine with a potential capacity of 5,000 units
per year,
calculate:
i. The economic order quantity (EOQ)
ii. The annual ordering cost
iii. The annual carrying cost
Transcribed Image Text:Wesley Utility Company uses 2,500 units per year which it stores at $0.50 per unit per annum. The cost to place an order is $100. a) Calculate: i. The economic order quantity (EOQ) b) If the company decides to make the items on its own machine with a potential capacity of 5,000 units per year, calculate: i. The economic order quantity (EOQ) ii. The annual ordering cost iii. The annual carrying cost
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