Cost of Prediction Error-Economic Order Quantity Model: Off The Rack, a clothing manufacturer, estimated the following components

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Cost of Prediction Error-Economic Order Quantity Model: Off The Rack, a clothing manufacturer, estimated the following components for determining economic order quantities for sweaters:

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Based on this information, the company ordered in lots of 25,495 units. After reviewing the data for the year, management concluded that storage costs should have been increased to $8 per unit.

Required: What is the cost of prediction error?

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Cost Accounting

ISBN: 9780256069198

3rd Edition

Authors: Edward B. Deakin, Michael Maher

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