Patriot Oman predicts that it will use 360,000 kgs of materials during the year. The material is expected to cost OMR 5 per kg. Patriot Oman anticipates that it will cost OMR 72 to place each order. The annual carrying cost is OMR 4 per kg. Determine the Economic ordering quantity.

Patriot Oman predicts that it will use 360,000 kgs of materials during the year. The material is expected to cost OMR 5 per kg. Patriot Oman anticipates that it will cost OMR 72 to place each order. The annual carrying cost is OMR 4 per kg. Determine the Economic ordering quantity.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 19P

See similar textbooks

Related questions

Q: A moped manufacturing company needs 100,000 units of moped tires for its production per year.The…

A: Economic order quantity was an inventory management costing principle used to find out required…

Q: Oster Company Ltd. manufactures dusk to dawn lamps. The following are the details of their operation…

A: Economic order quantity (EOQ) is a calculation used by firms to calculate their best order size,…

Q: Neptune Company has developed a small inflatable toy that it is anxious to introduce to its…

A: break-even analysis is the the target profit analysis. Under this approach we compute the…

Q: Items purchased from a vendor cost $20 each, and the forecast for next year’s demand is 1,000 units.…

A: Given: Demand = 1,000 units Ordering cost = $5 per unit Storage cost = $4 per unit

Q: Alexander pump LLC uses about 75000 valves per year and the usage is fairly constant at 6250 uni per…

A: Solution 1- EOQ =2×A×O/C A= ANNUAL CONSUMPTION O= ORDERING COST C=CARRYING COST/STORAGE COST…

Q: Wesley Utility Company uses 2,500 units per year which it stores at $0.50 per unit per annum. The…

A: EOQ = Economic order quantity (EOQ) is a calculation on which companies perform that represents…

Q: The Xenopeltis Company estimates its requirement, which is 39,000 units semiannually at a price of…

A: EOQ = Square root of [(2*Annual demand*Ordering cost)/(Price per unit * Carrying cost%)] EOQ =…

Q: ETS manufactures a component for its computer products. The annual demand for this component is 2500…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: Gilberto Company currently manufactures 78,000 units per year of one of its crucial parts. Variable…

A: Given: Manufacture units = 78000 per year Variable cost = $2.60 per unit Fixed cost (making this…

Q: ACE processing company uses 2,400 units of a product per year on a continuous basis. The product…

A: Economic Order Quantity is an inventory management technique where it helps to order the required…

Q: Neptune Company has developed a small Inflatable toy that it is anxlous to Introduce to Its…

A: Formulas:

Q: Sk8 Company produces skateboards and purchases 20,000 units of a wheel bearing each year at a cost…

A: EOQ is Economic Order Quantity. This is that ideal quantity at which ordering and carrying costs…

Q: A company requires 8,000 units of material A per month. The cost per order is $950 and the holding…

A: Total cost of buying the material includes holding cost + ordering cost

Q: related to making this part are $89,000 per year, and allocated fixed costs are $76,000 per year.…

A: Incremental analysis is a tool used in managerial accounting when choosing between alternative…

Q: H&M chief demand planner has estimated that 9250,000 units of clothing sold in 2021.H&M cost of…

A: Economic Order Quantity - EOQ helps the company ensure the quantity that needs to order quantity…

Q: Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling…

Q: A company annually consumes 10,000 units of Part C. The carrying cost of this part is P2 per year…

A: Economic order quantity in costing States the order quantity at which the ordering and carrying cost…

Q: Alpha retail store predicts an annual demand of 4920 kgs of a food product. It costs RO 100 to make…

A: In order to minimise the total inventory costs that includes ordering costs and inventory holding…

Q: The Warren W. Fisher Computer Corporation purchases 8,000 transistors each year as components in…

A: As you have asked multiple sub-parts we can solve only first three sub parts for you for rest of the…

Q: Anticipated sales for Safety Grip Company were 32,000 passenger car tires and 10,000 truck tires.…

A: Production Budget: This budget shows the quantities of units that a company should produce to meet…

Q: SamaCell has a demand of 2,000 cells per year. The cost of each unit is $80, and the inventory…

A: Economic Order Quantity (EOQ) refers to the concept of estimating the ideal quantity that a business…

Q: Lila battle has determined that the annual demand for number 6 screws is 100,000 screws. Lila, who…

A: Economic Order Quantity(EOQ) shows quantity of goods at which ordering cost and holding/carrying…

Q: A manufacturing company orders 24,000 units of concrete blocks semi-annually at a price of Php20.00…

A: Optimal order quantity is that order quantity or that number of units that must be ordered in order…

Q: Wayne Frederick expects sales of Bison Business Solutions's line of computer workstation furniture…

A: Total cost of goods sold = Cost of goods sold per unit * Number of units produced Gross margin =…

Q: Sunland, Inc., sells two types of water pitchers, plastic and glass. Plastic pitchers cost the…

A: The question is based on the concept of Cost Accounting.

Q: Bonita, Inc. is a company that manufactures and sells a single product. Unit sales for each of the…

A: An income statement is a financial report that indicates the revenue and expenses of a business. It…

Q: nt to be $6,000 in August when 8,600 units are expected to be produced. If rent is a fixed cost, and…

A: Fixed costs : fixed costs remain constant in a total amount over a specific range of activity these…

Q: The Xenopeltis Company estimates its requirement, which is 39,000 units semiannually at a price of…

A: Semi annual requirement = 39000 Units Annual requirement (A) = 39000*2 = 78000 Units Price per unit…

Q: American pany estimates that 60,000 special zippers will used in the manufacture of men's jackets…

A: The question is based on the concept of Financial Management.

Q: XYZ Inc. needs 325 kgs of a material per month. It costs OMR 100 to make and receive an order, and…

A: Annual demand: 325 kgs. x 12 months = 3,900 kgs. Cost per unit: OMR 2.00 Ordering cost per order:…

Q: The company expects that it will work for 7,000 machine-hours in January 2020. Using the high-low…

A: High-low method is the method which is used by the company to measure the fixed assets which are…

Q: BIG Pharmaceuticals Ltd. has invested $330,000 to date in developing a new type of insect repellent.…

A: Net present value is the sum of cash inflows discounted to present value by the cost of capital. IRR…

Q: Race One Motors is an Indonesian car manufacturer. At its largest manufacturing facility, in…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Nestle Ltd. produces its premium plant food in 50 Kg bags. Demand is 100,000 Kgs. per week and the…

A: Pounds per sack = 100 lb Week by week interest = 100,000 lb d = Wkly intt for sacks =…

Q: eptune Company has developed a small inflatable toy that it is anxious to introduce to its…

A: Break-even Point is a point where revenue is able to cover all fixed as well as variable expenses of…

Q: tamarisk, Inc. is a company that manufactures and sells a single product. Unit sales for each of the…

A: Solution Budget is the estimation of revenue and expenses over a specified future period of time.

Q: Clothes, Inc., has an average annual demand for red, medium polo shirts of 25,000 units. The cost of…

A: Cost accounting is one of the important branch of accounting. Under this branch, all type of costs…

Q: Salam's company expects its production of pipes will require 600,000 tons of aluminum over its…

A: Economic order quantity is referred to as that level of the inventory which would generate the least…

Q: A company needs a specific type of stored materials, with a quantity of 150,000 pieces, the cost of…

A: This question deals with the calculation of EOQ, number of order and when to supply each order.…

Q: How much is the carrying cost per unit? *

A: Carrying cost is such cost which a company bears as a storage cost per unit.

Q: The Xenopeltis Company estimates its requirement, which is 39,000 units semiannually at a price of…

A: Annual Requirement of units = Semi annual requirement x 2 Given that: Semi annual requirement =…

Q: Sawtooth Industries uses an economic order quantity (EOQ) model to manage its inventory investment.…

A: Economic order quantity represents the number of units that should be ordered by the entity in each…

Q: The XYZ company has traditionally ordered ink refills 80 units at a time. This company estimates…

A: Push systems - These inventory management systems stock and control inventory based on the forecasts…

Q: Neptune Company has developed a small inflatable toy that it is anxious to introduce to its…

A: Break-even point = Fixed cost / Contribution per unit (Sale price - Unit Variable cost) Weighted…

Q: Hoboken Industries currently manufactures 30,000 units of part MR24 each month for use in production…

A: Managerial accounting: Managerial accounting is more focused towards analyzing information and…

Q: Demand for a product is 12,000 units per year. Every time an order is made, the company must pay…

A: Cost of inventory is the total cost of ordering and carrying the inventory.

Q: Gilberto Company currently manufactures 66,000 units per year of one of its crucial parts. Variable…

A: Incremental cost: Incremental cost is the analysis of the costs in different avenues, which could be…

Q: BIG Pharmaceuticals Ltd. has invested $330,000 to date in developing a new type of insect repellent.…

Question

3. Patriot Oman predicts that it will use 360,000 kgs of
materials during the year. The material is expected to cost
OMR 5 per kg. Patriot Oman anticipates that it will cost
OMR 72 to place each order. The annual carrying cost is
OMR 4 per kg. Determine the Economic ordering quantity.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000 for reworking products. A good estimate of nonvalue-added costs would be a. 70,000. b. 130,000. c. 40,000. d. 90,000. e. 100,000.
Refer to Cornerstone Exercises 2.2 and 2.3. Next year, Pietro expects to produce 50,000 units and sell 49,300 units at a price of 12.50 each. Beginning inventory of finished goods is 42,500, and ending inventory of finished goods is expected to be 34,000. Total selling expense is projected at 26,000, and total administrative expense is projected at 134,000. Required: 1. Prepare an income statement in good form. Be sure to include the percent of sales column. 2. What if the cost of goods sold percentage for the past few years was 65 percent? Explain how management might react.
Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4.000 units were produced: Variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 6,000 units of part A for the next years production. Cory Corporation has offered to supply 6,000 units of part A at a price of $7.00 per unit. It Gent accepts the offer, all of the variable costs and $1,200 of the fixed costs will be avoided. Should Gent Designs accept the offer from Cory Corporation?
Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
Sunrise Poles manufactures hiking poles and is planning on producing 4,000 units in March and 3,700 in April. Each pole requires a half pound of material, which costs $1.20 per pound. The companys policy is to have enough material on hand to equal 10% of the next months production needs and to maintain a finished goods inventory equal to 25% of the next months production needs. What is the budgeted cost of purchases for March?
If the sales forecast estimates that 50,000 units of product will be sold during the following year, should the factory plan on manufacturing 50,000 units in the coming year? Explain.
Remarkable Enterprises requires four units of part A for every unit of Al that it produces. Currently, part A is made by Remarkable, with these per-unit costs in a month when 4,000 units were produced: Variable manufacturing overhead is applied at $1.60 per unit. The other $0.50 of overhead consists of allocated fixed costs. Remarkable will need 8,000 units of part A for the next years production. Altoona Corporation has offered to supply 8,000 units of part A at a price of $8.00 per unit. If Remarkable accepts the offer, all of the variable costs and $2,000 of the fixed costs will be avoided. Should Remarkable accept the offer from Altoona Corporation?
Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling 44,000 shelves for $32 each. Cutrate Furniture approached Jansen about buying 1,200 shelves for bookcases it is building and is willing to pay $26 for each shelf. No packaging will be required for the bulk order. Jansen usually packages shelves for Home Depot at a price of $1.50 per shell. The $1.50 per-shelf cost is included in the unit variable cost of $27, with annual fixed costs of $320.000. However, the $130 packaging cost will not apply in this case. The fixed costs will be unaffected by the special order and the company has the capacity to accept the order. Based on this information, what would be the profit if Jansen accepts the special order? A. Profits will decrease by $1,200. B. Profits will increase by $31,200. C. Profits will increase by $600. D. Profits will increase by $7,200.
Cloud Shoes manufactures recovery sandals and is planning on producing 12.000 units in March and 11,500 in April. Each sandal requires 1.2 yards if material, which costs $3.00 per yard. The companys policy is to have enough material on hand to equal 15% of next months production needs and to maintain a finished goods inventory equal to 20% of the next months production needs. What is the budgeted cost of purchases for March?
Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its products is 65 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are 12,960,000 per year. The total labor minutes available are 1,440,000. During the year, the cell was able to produce 0.6 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. 2. Compute the applied conversion cost per minute (the amount of conversion cost actually assigned to the product). 3. Discuss how this approach to assigning conversion cost can improve delivery time performance. Explain how conversion cost acts as a performance driver for on-time deliveries.
A company is spending 70,000 per year for inspecting, 60,000 per year for purchasing, and 56,000 per year for reworking products. What is a good estimate of non-value-added costs? a. 126,000 b. 70,000 c. 56,000 d. 130,000