Anggun Batik Enterprise operates a small cottage industry making printed batik shirts. One of the materials used is cotton fabric which is purchased in rolls. The cost of fabric is RM280 for each roll. At present, the annual demand is 840 rolls. Each delivery incurs RM18 for transportation and RM12 for office supplies. The carrying costs is estimated at 5% of the fabric cost.

Required:

a. Tabulate the total costs of inventory for order sizes 50 rolls, 70 rolls and 90 rolls.

b. Determine the economic order quantity based on your answer in (a).

c. Identify the following costs as direct material or indirect material.

i. Milk for ice cream production

ii. Ink for printing shop

iii. Steering wheels for automobile production

iv. Screw for producing office table

v. Cleaning supplies in manufacturing business