Accounting Question Answers
Essay by Loo Hwa • December 13, 2016 • Exam • 840 Words (4 Pages) • 1,293 Views
QUESTION 1:
Jaya Mart needs 1000 coffee makers per year. The cost of each coffee maker is RM78. Ordering cost is RM100 per order. Carrying cost is 20% of per unit cost. Lead time is 5 days. Jaya Mart is open 360 days in a year.
- What is the EOQ level?
EOQ = √ 2SO / C[pic 1]
[pic 2]
= √ 2 X 1000 X 100 /15.60
= 113 units
- How many times per year does the store reorder?
S / Q
= 1000 / 113 360 / 9
= 9 times = 40 days
The company will place the store reorder at every 40 days.
- What is the re-order point?
Reorder point = ( S / time period per year ) X Lead time
= ( 1000 / 360 ) X 5
= 14 units
- What is the total annual cost if the EOQ quantity is ordered
Total annual cost = ( Q / 2 X C) + (S / Q X O)
= ( 113/2 X 15.60 ) + ( 1000/113 X 100 )
= RM 1766.36
QUESTION 2:
Hirajuki Distributors has determined the following inventory information for its operation:
- Annual unit usage is 500,000 units.
- The carrying cost is 10% of the purchase price of the goods.
- The purchase price is RM 5 per unit.
- The ordering cost is RM 100 per order.
- The desired safety stock is 5,000 units.
- Delivery time is four weeks. Assume Hirajuki’s operation is 50-week year.
- What is the EOQ level?
[pic 3]
EOQ = √ 2SO / C
= √ 2 X 500,000 X 100 / 0.50[pic 4]
= 14,142 units
- What is the average inventory?
Average inventory = Q / 2 + safety sock
= 14,142 / 2 + 5000 unit
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