Question
In: Accounting
A coffee roaster in Richardson has opened a retail store adjacent to the production plant. The...
A coffee roaster in Richardson has opened a retail store adjacent to the production plant. The plant manager wishes to optimize the inventory costs of the company’s best-selling coffee. The annual demand for the coffee is 36,000 bags and the plant works 240 days per yr. The plant can roast the coffee at a rate of 300 bags per day. The cost to prepare the equipment to start a production run is $350 and the annual inventory carrying cost is $3.6 per year. Use 2 decimal places in your calculations (if needed) and round your final answer to the closest whole number.
1. What should be the optimum quantity of coffee to produce?
2. What is the maximum inventory achieved during a production run?
3. How many production runs are needed to meet the annual demand?
4. What is the average inventory of coffee?
5. What is the minimum total annual cost of producing and storing the company’s best-selling coffee?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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Utease Corporation has many production plants across the midwestern United States. A newly opened plant, the...
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opened plant, the Bellingham plant, produces and sells one product.
The plant is treated, for responsibility accounting purposes, as a
profit center. The unit standard costs for a production unit, with
overhead applied based on direct labor hours, are as follows.
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Utease Corporation has many production plants across the
midwestern United States. A newly opened plant, the Bellingham
plant, produces and sells one product. The plant is treated, for
responsibility accounting purposes, as a profit center. The unit
standard costs for a production unit, with overhead applied based
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