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Question 3 (a) Trinket Keepsakes is a company that uses cardboard treat boxes. The company only uses one box size, for which the demand

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Question 3 (a) Trinket Keepsakes is a company that uses cardboard treat boxes. The company only uses one box size, for which the demand is a consistent 280 units per week for 48 working weeks per year. Trinket Keepsakes currently purchases the boxes from an external supplier for 2.50 per box in batches of 250 boxes. The cost of each order placed with the supplier is 70 regardless of the quantity of boxes ordered. The cost of holding each unit per annum, is estimated to be 20% of the purchase price per unit. Required: ii. iii. i. Calculate the annual cost of the company's current inventory control policy. (4 Marks) Calculate the economic order quantity (EOQ) and the annual costs for the company if they adopt an EOQ policy for inventory control. (5 Marks) Based on your calculations at i. and ii. above, advise Trinket Keepsakes about inventory control policies giving reasons for your suggestions. (6 Marks) (b) Anime DAC operates a factory producing gaming cards such as Yu Gi Oh. It is a small operation on the Kilkenny/Waterford border, which employs 18 direct production workers. These workers are paid 16.80 per hour basic rate and normally work 39 hours per week. Overtime is paid at 40% more than the basic rate per hour. During the last 6 weeks, the production workers have worked 4800 direct labour hours in total. 45% of the overtime for the last six weeks was worked so the factory could meet general demand deadlines. The balance of the overtime was a specific request from a customer organising a gaming event in the local comic shop. Also, the production manager noted that in the last six weeks approximately 90 hours of the production workers' time was recorded as idle time. Required: i. Calculate the amount to charge to the work-in-progress (WIP) account as direct labour cost. (6 Marks) Question 3 continued overleaf

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