1. CEx.8-18

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Ordering Cost, Carrying Cost, and Total InventoryRelated Cost

La Cucina Company sells kitchen supplies and housewares. Lava stone is used in production of molcajetes (mortars and pestles used in the making of guacamole) and is purchased from external suppliers. Each year, 8,000 pounds of lava stone is used; it is currently purchased in lots of 500 pounds. It costs La Cucina $5 to place the order, and carrying cost is $2 per pound per year.

Required:?1. How many orders for lava stone does La Cucina place per year?

orders per year

2. What is the total ordering cost of lava stone per year? $

3. What is the total carrying cost of lava stone per year? $

4. What is the total cost of La Cucina's inventory policy for lava stone per year? $

2. CEx.8-19

Economic Order Quantity

La Cucina Company sells kitchen supplies and housewares. Lava stone is used in production of molcajetes (mortars and pestles used in the making of guacamole) and is purchased from external suppliers. Each year, 8,000 pounds of lava stone is used; it is currently purchased in lots of 500 pounds. It costs La Cucina $5 to place the order, and carrying cost is $2 per pound per year.

Required:?1. What is the EOQ for lava stone?

pounds

2. How many orders per year for lava stone will La Cucina place under the EOQ policy? orders per year

3. What is the total annual ordering cost of lava stone for a year under the EOQ policy? $

4. What is the total annual carrying cost of lava stone per year under the EOQ policy? $

5. What is the total annual inventoryrelated cost for lava stone under the EOQ? $

3. MC.8-02.Algo

In a segmented income statement, which of the following statements is true?

a. Segment margin is equal to contribution margin.?b. Contribution margin is equal to sales less variable expenses and allocated common fixed expenses for a segment. c. Segment margin is equal to contribution margin less direct and common fixed expenses.?d. Common fixed expenses are always allocated to each segment.?e. Segment margin is equal to contribution margin less direct fixed expenses.

4. MC.8-05.Algo

Suppose that a material has a lead time of three days and that the average usage of the material is 12 units per day. What is the reorder point?

a. 15 b. 12 c. 48 d. 36 e. 3

5. MC.8-06.Algo

Suppose that a material has a lead time of five days and that the average usage of the material is 12 units per day. The maximum usage is 15 units per day. What is the safety stock?

a. 9 b. 3 c. 6

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d. 15 e. 5

6. MC.8-08

Garrett Company provided the following information:

Units sold?Price?Variable cost per unit Direct fixed cost

Product 1

10,000 $20 $10 $35,000

Product 2

20,000 $15 $10 $75,000

Common fixed cost totaled $46,000. Garrett allocates common fixed cost to Product 1 and Product 2 on the basis of sales. If Product 2 is dropped, which of the following is true?

a. Sales will increase by $300,000.?b. Overall operating income will increase by $2,600. c. Overall operating income will decrease by $25,000. d. Overall operating income will not change.?e. Common fixed cost will decrease by $27,600.

7. Ex.8-22

Inventory Valuation under Absorption Costing

Amiens Company produced 20,000 units during its first year of operations and sold 18,900 at $17 per unit. The company chose practical activityat 20,000 unitsto compute its predetermined overhead rate. Manufacturing costs are as follows:

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Direct materials Direct labor Variable overhead Fixed overhead

$ 80,000 101,400 15,600 54,600

Required:?1. Calculate the unit cost for each of these four costs. Round your answers to the nearest cent.

Unit direct materials cost $

Unit direct labor cost $ Unit variable overhead cost $ Unit fixed overhead cost $

2. Calculate the cost of one unit of product under absorption costing. Round your answer to the nearest cent. $ per unit

3. How many units are in ending inventory? units

4. Calculate the cost of ending inventory under absorption costing. $

8. Ex.8-23

Inventory Valuation under Variable Costing

Lane Company produced 50,000 units during its first year of operations and sold 47,300 at $12 per unit. The company chose practical activityat 50,000 unitsto compute its predetermined overhead rate. Manufacturing costs are as follows:

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Direct materials Direct labor Variable overhead Fixed overhead

$123,000 93,000 65,000 51,000

Required:?1. Calculate the cost of one unit of product under variable costing. Round your answer to the nearest cent.

$ per unit?2. Calculate the cost of ending inventory under variable costing.

$

9. Ex.8-25

Income Statements under Absorption and Variable Costing?In the coming year, Kalling Company expects to sell 28,700 units at $32 each. Kalling's controller provided the following information for the coming year.

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Units production?Unit direct materials?Unit direct labor?Unit variable overhead?Unit fixed overhead*?Unit selling expense (variable)?Total fixed selling expense?Total fixed administrative expense?* The unit fixed overhead is based on 30,000 units produced.

30,000 $9.95 $2.75 $1.65 $2.50 $2.00

$65,500 $231,000

Required:?1. Calculate the cost of one unit of product under absorption costing. Round to the nearest cent.

$ per unit

2. Calculate the cost of one unit of product under variable costing. Round to the nearest cent. $ per unit

3. Calculate operating income under absorption costing for next year. $

4. Calculate operating income under variable costing for next year. $

10. Ex.8-32.Algo

EOQ, Ordering Cost, Carrying Cost, and Total InventoryRelated Cost

Ranger Company purchases 18,580 units of Product Beta each year in lots of 864 units per order. The cost of placing one order is $10, and the cost of carrying one unit of product in inventory for a year is $8.

Required:

If required, round your answers to nearest whole value.

1. What is the EOQ for Beta? units

2. How many orders for Beta will Ranger place per year under the EOQ policy? orders per year

3. What is the total ordering cost of Beta for a year under the EOQ policy? $

4. What is the total carrying cost of Beta per year under the EOQ policy? $

5. What is the total cost of Ranger's inventory policy for Beta per year under the EOQ policy? $