Morgan Company's annual demand for Model X253 is 10,000 units. Morgan is unsure about the relevant carrying
Question:
Morgan Company's annual demand for Model X253 is 10,000 units. Morgan is unsure about the relevant carrying cost per unit per year and the relevant ordering cost per purchase order. This table presents six possible combinations of carrying and ordering costs.
Relevant CarryingRelevant Ordering
Cost per Unit per YearCost per Purchase Order
$10 ........................................... $300
10 ............................................200
15 ............................................300
15 ............................................200
20 ............................................300
20 ............................................200
Required
1. Determine EOQ for Morgan for each of the relevant ordering and carrying-cost alternatives.
2. How does your answer to requirement 1 give insight into the impact on EOQ of changes in relevant ordering and carrying costs?
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 978-0133138443
7th Canadian Edition
Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham