Menen's photography Store sells 25,000 packets of photographic paper per year. The store is closed only for two weeks during the year due to annual holidays. The wholesale price is $3 per packet. The cost of processing each order to be placed with the wholesaler is $8 and carrying costs are $0.10 per packet per year.

Required:

1. What is theEOQfor the store?

2. Compute thetotalannual:

(i) Number of orders,

(ii) Total ordering costs,

(iii) Total carrying costs

(iv) Explain why traditional overhead allocation methods (i.e., plant-wide anddepartmental) distort product

costs compared to ABC costing.