Megah Berhad sources its component for its annual manufacturing requirement from Ho Chi Minh, Vietnam. The annual payment for the component is RM6 million for an average unit price of RM20. The holding cost is RM5 per unit per year, including the insurance costs and financing costs. The fixed cost per order is RM100. There is a lead time of one month between the placing of an order and delivery of the goods. The fluctuations in demand for the component are anticipated in the next coming months. The stockouts will cost the company RM40 per unit. The following is the probability distribution of estimated usage of the raw material for the month:
Megah Berhad sources its component for its annual manufacturing requirement from Ho Chi Minh, Vietnam. The annual payment for the component is RM6 million for an average unit price of RM20. The holding cost is RM5 per unit per year, including the insurance costs and financing costs. The fixed cost per order is RM100. There is a lead time of one month between the placing of an order and delivery of the goods. The fluctuations in demand for the component are anticipated in the next coming months. The stockouts will cost the company RM40 per unit. The following is the probability distribution of estimated usage of the raw material for the month:
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 11P: Emerald Island Company is considering building a manufacturing plant in County Kerry. Predicting...
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