A company has budgeted to use 2,400 units of component BEN10 in its production department during the forthcoming year. Production will be distributed uniformly throughout the year. The following information is available regarding component BEN10: Cost of component RM 25 each (before discount) Ordering costs RM 100 per order Stock holding costs 12% of the component cost per annum Required: Use the EOQ formula to verify your answer.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
A company has budgeted to use 2,400 units of component BEN10 in its production department during the forthcoming year. Production will be distributed uniformly throughout the year. The following information is available regarding component BEN10:
Cost of component RM 25 each (before discount)
Ordering costs RM 100 per order
Stock holding costs 12% of the component cost per annum
Required:
Use the EOQ formula to verify your answer.
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