Question
The sales of mouthwash at MARKAL Pharmacy over the past 6 months have averaged 2,000 cases per month, which is the current order quantity. Markal's
The sales of mouthwash at MARKAL Pharmacy over the past 6 months have averaged 2,000 cases per month, which is the current order quantity. Markal's cost is $12.00 per case. The company estimates its cost of capital to be 12 percent. Insurance, taxes, breakage, handling, and pilferage are estimated to be approximately 6 percent of item cost. The cost of of placing an order is $38.00. What is economic order quantity? What is the total inventory cost under economic order quantity? Compare the total cost savings with the current purchase order of 2000 case per month.
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Step: 1
To calculate the Economic Order Quantity EOQ we can use the following formula EOQ sqrt2 D S H Where ...Get Instant Access to Expert-Tailored Solutions
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Accounting Principles
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
9th Edition
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