Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company produces milk base shakes for weight loss. It reqires 0,04 litres of soy milk and produces and sells 562,500 grams of shakes annually.

A company produces milk base shakes for weight loss. It reqires 0,04 litres of soy milk and produces and sells 562,500 grams of shakes annually. The cost to place a single order is $60 per hour and the annual carrying cost inventory is 5% of the cost of the cost of the soy milk per annum. The normal time to place an individual order is 2 hours. Currently, the company orders nine (9) times per year. The main supplier of the soy milk advised the financial controller that a 6% discount would be given if the entity doubles its current lot size. He also informed that a further 6% would be given if the entity tripled its current lot size. The material is currently bought from its suppliers for $ 60 per kilogram.

(A) calculate the economic order quantity (EOQ) 4 marks

(B) calculate the total cost based on the eoq 4 marks

(C) calculate the total cost for each alternate order, including the current policy 12marks

(D) what is the optimal order quantity and why? 2marks

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting Method And Meaning Teachers Guide

Authors: R.M.S. Wilson

2nd Edition

0412436205, 978-0412436208

More Books

Students also viewed these Accounting questions