Economic order quantity; order cost; carrying cost

 

Starr Company predicts that it will use 360,000 units of material during the year. The material is expected to cost $5 per unit. Starr anticipates that it will cost $72 to place each order. The annual carrying cost is $4 per unit.

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.

2.Recording materials transactions.

Make a journal entry to record each of the following materials transactions:

A. Total materials purchased on account during the month amounted to $200,000.

B. Direct materials requisitioned for the month totaled $ 175,000.

C. Indirect materials requisitioned during the month totaled $ 12,000.

D. Direct materials returned to the storeroom from the factory amounted to $2,500.

E. Total materials returned to vendor during the month amounted to $800.

F. Payment during the month for materials purchases totaled $ 160.000.

3. FiFo Costing

using first-in. first-out, perpetual inventory costing, and the following information, determine the cost of materials used and the cost of the May 31 inventory.

Using first-in, first-out, perpetual inventory costing, and the following informa- tion, determine the cost of materials used and the cost of the May 31 inven- tory: May | Balance on hand, 1,000 yds. (linen, $4 each). 3 Issued 250 yds. 5 Received 500 yds. at $4.50 each. 6 Issued 150 yds. 10 Issued 110 yds. II Factory returned 10 yds. to the storeroom that were issued on the 10th. 15 Received 500 yds. at $5.00 each. 20 Returned 300 yds. to vendor from May 15 purchase. 26 Issued 600 yds. T