SoCal Co. predicts that it will use 225,000 gallons of material during the year. The material is

Question:

SoCal Co. predicts that it will use 225,000 gallons of material during the year. The material is expected to cost $10 per gallon. It anticipates that it will cost $40 to place each order. The annual carrying cost is $2 per gallon.

a. Determine the most economical order quantity by using the EOQ formula.

b. Determine the total cost of ordering and carrying at the EOQ point.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Principles of Cost Accounting

ISBN: 978-1133187868

16th edition

Authors: Edward J. Vanderbeck

See More Books

Question Posted: May 05, 2014 10:21 AM

See More Questions

Let the process (Xt), t 0, solve the SDE dXt =-Xidt + dB, Xo E R. (a) Show that the process Y = et X, has independent Gaussian increments, and give the distribution of the increments over the time...
A new manufacturing machine is expected to cost $286,000, have an eight-year life, and a $30,000 salvage value . The machine will yield an annual incremental after-tax income of $35,000 after...
Epworth Co. predicts that it will use 360,000 gallons of material during the year. It anticipates that it will cost $72 to place each order. The annual carrying cost is $4 per gallon. a. Determine...
Solomon Company's cost and production data for two recent months included the following: March April Production (units) 400 600 $2,400 $ $2,400 $1,200 Rent Utilities 800 Required a. Separately...
Find the derivative of sec-1(x). Write the answer without any trigonometric functions. We can use Theorem 2.13 to find the derivatives of the inverse trigonometric functions.
The dimensions of a jib crane, which is manufactured by the Basick Co., are given in the figure. The crane has a mass of 800 kg and a center of mass at G.The bearing at A is a journal bearing and can...
Audit During a 52-week period, a company paid overtime wages for 18 weeks and hired temporary help for 9 weeks. During 5 weeks, the company paid overtime and hired temporary help. (a) Are the events...
Canwest Global Communications Corp. reported cash used by operating activities of $104,539,000 and revenues of $2,867,459,000 during 2009. Cash spent on plant asset additions during the year was...
Chapter 11: Long-Term Liabilities 1: On 1/1/2010, Need Dough Corp issues two bonds: - Bond A is a 3-year bond with a face value of $100,000. Bond A makes annual coupon payments at a stated interest...
Shiloh Chemicals, Inc., which manufactures products on a continuous basis, had 800 units in process in Dept. 1, one-half completed, at the beginning of May. The costs in April for processing these...
New England Co. predicts that it will use 360,000 gallons of material during the year. The material is expected to cost $5 per gallon. It anticipates that it will cost $72 to place each order. The...
Palomar Manufacturing Inc. records the following use of materials during June: Prepare a summary journal entry for the materialsrequistions. Materials Requisitions Direct Materials $20,000 18,000...
Should the disclosure of accounting information for companies be prescribed in detail in an Act of Parliament?
For the data in Problem 42, how would you predict demand for medical kits using (a) moving averages and (b) exponential smoothing (with alpha values equal to 0.5 and greater) for the 21st week? Data...
For a light ray that crosses the interface between medium 1 having index of refraction $n_{1}$ and medium 2 having index of refraction $n_{2}$, what relationship between $\theta_{1}$ and...
The atmosphere of the planet Venus is almost entirely composed of carbon dioxide (about 96.5 % carbon dioxide). The carbon dioxide on Venus might be in equilibrium with carbonate ions in minerals on...
Seniority quantum numbers typically measure how many fermions are in some sense "not paired" with another fermion. For the quasispin model of Problem 31.3 , define the Racah seniority $v$ through...
(a) Place a perfectly conducting sphere with radius a in a uniform electric field E 0 and let an origin centered electric dipole field represent the field produced by the sphere. Use this information...
P/E Ratios. Castles in the Sand generates a rate of return of 20 percent on its investments and maintains a plowback ratio of .30. Its earnings this year will be $2 per share. Investors expect a 12...
How has the globalization of firms affected the diversity of their employees? Why has increased diversity put an additional burden on accounting systems?
The director of the Child Protection Agency is very pleased with the summary report that you designed in Question 2. To help the child protection workers manage and prioritize their caseload, the...
What is meant by the term equivalent production as used in the process cost system?
Why is it necessary to estimate the stage or degree of completion of work in process at the end of the accounting period under the process cost system?
What would be the effect on the unit cost of finished goods if an estimate of the stage of completion of work in process was too high?
Arnold inc. is considering a proposal to manufacture high end protein bars used as food supplements by body builders. The project requires an upfront investment into equipment of $1.4 million. This...
Billy Bob bank has three assets. It has $83 million invested in consumer loans with a 3-year duration, $46 million invested in T-Bonds with a 12-year duration, and $69 million in 6-month (0.5 years)...
Ventaz Corp manufactures small windows for back yard sheds. Historically, its demand has ranged from 30 to 50 windows per day with an average of 4646. Alex is one of the production workers and he...

SoCal Co. predicts that it will use 225,000 gallons of material during the year. The material is

Question:

Step by Step Answer:

a EOQ 2 CN K 2 40 225000 2 18000000 2 9000000 3000 gallons ...View the full answer

Principles of Cost Accounting

Students also viewed these Cost Accounting questions