Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Lakeland Company produces lawn mowers and purchases 2,800 units of a rotor blade part each quater at a cost of $60 per unit. In addition,

image text in transcribed

Lakeland Company produces lawn mowers and purchases 2,800 units of a rotor blade part each quater at a cost of $60 per unit. In addition, the holding cost is $10 per unit per year. The relevant ordering cost per purchase order is $250. Required A, Calculate Lakeland's EOQ for the rotor blade part. (5 marks) B, Calculate Lakeland's annual relevant ordering costs for the EOQ calculated in requirement 1. (5 marks) C, Calculate Lakeland's annual relevant holding costs for the EOQ calculated in requirement 1(5 marks) D, Assume that demand is uniform throughout the year and known with certainty so that there is no need for safety stocks. The purchase-order lead time is half a month. Calculate Lakeland's reorder level for the rotor blade part. (5 marks) E, Supplier offer discount 15% if the entity purchases from 5,000 units per order. i, In financial term, whether the entity accept the offer of supplier? (Compare total inventory cost include purchase cost, holding cost and ordering cost) (10 marks) ii, List and explain 3 other factors that the entity should consider before accepting offer of the supplier

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

Financial And Managerial Accounting

Authors: John J. Wild

9th Edition

1260728773, 9781260728774

More Books

Students also viewed these Accounting questions