COST ACCOUNTING
16th Edition
ISBN: 9781323169261
Author: Horngren
Publisher: PEARSON C
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Question
Chapter 20, Problem 20.18MCQ
To determine
Economic Order Quantity (EOQ):
Economic order quantity is the quantity of order that is purchased from supplier at a time, the EOQ aim is to reduce the carrying and ordering cost of inventory. EOQ is also referred as the optimum level of lot size.
To identify: The correct option
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Jill’s Custom Bags manufacturers and sells 12,000 customer designer bags per year, each requiring three yards of a specially manufactured fabric. These bags are sold evenly throughout the year. The materials for these bags require two months’ lead time. Jill desires to maintain a safety stock of sufficient material to meet one month’s demand. What is Jill’s reorder point?a. 3,000b. 6,000c. 9,000d. 12,000
Appendix: EPR
Rachelle Razer has taken a job as production superintendent in a plant that makes, among other products, jewelry
cases. She is trying to determine how many cases to produce on each production run (EPR). Discussions reveal that last
year the plant made 14,100 such cases, and this level of demand is expected for the coming year. The setup cost of each
run is $400, and the cost of carrying a case in inventory for a year is estimated at $2.50.
a. Calculate the EPR for jewelry cases and the total cost associated with it.
Note: Round your answers to the nearest whole unit.
ERP 2,124
units
Total cost $ 5,312
x
b. Recalculate the EPR and total cost if the annual cost of carrying a case in inventory is $10 and the setup cost is $100.
Note: Round your answer to the nearest whole unit.
ERP 531
units
Total cost $ 531,000
x
Q.3.1 Gill Enterprises produces a number of consumer items, including a stove. A key
component of the stove is purchased from an outside supplier. In total, the company
purchases 2 500 components each year. It costs approximately R12 to place an order
and it costs R0.25 to carry one part in inventory for a year. The company is
operational for 50 weeks in a year.
Required:
Q.3.1.2
It takes about four weeks to receive an order of parts from the supplier.
The company normally uses 52 parts each week in production. However,
usage can be as high as 70 parts per week. Calculate the safety stock.
Calculate the reorder point with safety stock included.
Chapter 20 Solutions
COST ACCOUNTING
Ch. 20 - Why do better decisions regarding the purchasing...Ch. 20 - Name six cost categories that are important in...Ch. 20 - What assumptions are made when using the simplest...Ch. 20 - Give examples of costs included in annual carrying...Ch. 20 - Give three examples of opportunity costs that...Ch. 20 - What are the steps in computing the cost of a...Ch. 20 - Why might goal-congruence issues arise when...Ch. 20 - JIT purchasing has many benefits but also some...Ch. 20 - What are three factors causing reductions in the...Ch. 20 - You should always choose the supplier who offers...
Ch. 20 - Prob. 20.11QCh. 20 - What are the main features of JIT production, and...Ch. 20 - Distinguish inventory-costing systems using...Ch. 20 - Describe three different versions of backflush...Ch. 20 - Discuss the differences between lean accounting...Ch. 20 - The order size associated with the...Ch. 20 - Prob. 20.17MCQCh. 20 - Prob. 20.18MCQCh. 20 - Lyle Co. has only one product line. For that line,...Ch. 20 - Just-in-time inventory assumes all of the...Ch. 20 - Economic order quantity for retailer. Wonder Line...Ch. 20 - Economic order quantity, effect of parameter...Ch. 20 - EOQ for a retailer. The Fabric World sells fabrics...Ch. 20 - EOQ for manufacturer. Sk8 Company produces...Ch. 20 - Sensitivity of EOQ to changes in relevant ordering...Ch. 20 - JIT production, relevant benefits, relevant costs....Ch. 20 - Backflush costing and JIT production. Grand...Ch. 20 - Backflush costing, two trigger points, materials...Ch. 20 - Backflush costing, two trigger points, completion...Ch. 20 - Prob. 20.30PCh. 20 - Prob. 20.31PCh. 20 - Prob. 20.32PCh. 20 - Prob. 20.33PCh. 20 - JIT purchasing, relevant benefits, relevant costs....Ch. 20 - Supply-chain effects on total relevant inventory...Ch. 20 - Supply-chain effects on total relevant inventory...Ch. 20 - Backflush costing and JIT production. The Acton...Ch. 20 - Backflush, two trigger points, materials purchase...Ch. 20 - Backflush, two trigger points, completion of...Ch. 20 - Lean accounting. Reliable Security Devices (RSD)...Ch. 20 - JIT production, relevant benefits, relevant costs,...
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