Question 1

Laird Company uses 405 units of a part each year. The cost of placing one order is $5; the cost of carrying one unit in inventory for a year is $2. Laird currently orders 81 units at a time.

Required:

A. The annual ordering cost of Laird's current policy is $

B. The annual carrying cost of Laird's current policy is $

C. The total cost of Laird's current policy is $

D. What is the economic order quantity (EOQ) for Laird?

E. What is the total inventory-related cost at the EOQ? $

Question 2

During the most recent year, Boston Corp. had the following data:

Beginning inventory in units	-
Units produced	15,400
Units sold ($125 per unit)	8,200
Variable costs per unit:
Direct materials	$13
Direct labor	$16
Variable overhead	$8
Fixed costs:
Fixed overhead per unit produced	$23
Fixed selling and administrative	$185,000

Required:

A. How many units are in ending inventory? units

B. Using absorption costing, calculate the per-unit product cost. $

What is the value of ending inventory?

C. Using variable costing, calculate the per-unit product cost. $

What is the value of ending inventory?

D. Prepare an income statement using absorption costing.

Boston Corp.
Absorption-Costing Income Statement
For the Coming Year

E. Prepare an income statement using variable costing.

Boston Corp.
Variable-Costing Income Statement
For the Coming Year
Less: Fixed expenses