Question
In: Accounting
Gloria Goh operates a factory that manufactures pastries and related products. One of the major raw...
Gloria Goh operates a factory that manufactures pastries and related products. One of the major raw materials used is wheat, which she buys for $5 per kilogram. The factory operates for 350 days each year. The following information has been provided: Annual usage of wheat 80 000 kilograms Average time between placing and receiving order 4 days Estimated cost of ordering and receiving inventory (per order) $2 Estimated annual cost of carrying a kilogram of maize in stock $0.20 Required: 1 Use the above data to calculate: (a) Economic order quantity (EOQ). (b) Number of orders per year. 2 Gloria has recently heard of just-in-time (JIT) purchasing, and wonders if she should use it in his business. However, he is very concerned that the cost of placing frequent orders will be too high. Explain the advantages of JIT purchasing and address specifically his concerns about cost.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Roland Company operates a small factory in which it manufactures two products: A and B. Production...
Roland Company operates a small factory in which it manufactures
two products: A and B. Production and sales result for last year
were as follow:
A
B
Units sold
8,000
16,000
Selling price per unit
65
52
Variable costs per unit
35
30
Fixed costs per unit
15
15
For purposes of simplicity, the firm allocates total fixed costs
over the total number of units of A and B produced and sold.
The research department has developed a new product...
Tharp Company operates a small factory in which it manufactures two products: C and D. Production...
Tharp Company operates a small factory in which it manufactures
two products: C and D. Production and sales results for last year
were as follows.
C
D
Units sold
8,800
19,000
Selling price per unit
$93
$75
Variable cost per unit
47
39
Fixed cost per unit
20
20
For purposes of simplicity, the firm averages total fixed costs
over the total number of units of C and D produced and sold.
The research department has developed a new
product...
Company X operates a small factory in which it manufactures two products: C and D. Production...
Company X operates a small factory in which it manufactures two
products: C and D. Production and sales results for last year were
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Item C D
Units sold 9,000 20,000
Selling price per unit 98 75
Variable cost per unit 50 40
Fixed cost per unit 24 24
For purposes of simplicity, the firm averages total fixed costs
over the total number of units produced. The research department
has developed a new product (E) as a replacement for...
Tharp Company operates a small factory in which it manufactures two products: C and D. Production...
Tharp Company operates a small factory in which it manufactures
two products: C and D. Production and sales results for last year
were as follows.
C
D
Units sold
9,000
19,000
Selling price per unit
$97
$75
Variable cost per unit
50
39
Fixed cost per unit
20
20
For purposes of simplicity, the firm averages total fixed costs
over the total number of units of C and D produced and sold.
The research department has developed a new
product...
Tharp Company operates a small factory in which it manufactures two products: C and D. Production...
Tharp Company operates a small factory in which it manufactures
two products: C and D. Production and sales results for last year
were as follows.
C
D
Units sold
9,100
19,600
Selling price per unit
$95
$77
Variable cost per unit
50
41
Fixed cost per unit
22
22
For purposes of simplicity, the firm averages total fixed costs
over the total number of units of C and D produced and sold.
The research department has developed a new
product...
Tharp Company operates a small factory in which it manufactures two products: C and D. Production...
Tharp Company operates a small factory in which it manufactures
two products: C and D. Production and sales results for last year
were as follows.
C
D
Units sold
9,200
19,900
Selling price per unit
$95
$78
Variable cost per unit
49
42
Fixed cost per unit
25
25
For purposes of simplicity, the firm averages total fixed costs
over the total number of units of C and D produced and sold.
The research department has developed a new
product...
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