COST ACCOUNTING
16th Edition
ISBN: 9781323694008
Author: Horngren
Publisher: PEARSON C
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 20, Problem 20.19MCQ
Lyle Co. has only one product line. For that line, the reorder point is 500 units, the lead time for production is three weeks, and the sales volume is estimated at 50 units per week. Lyle has established which of the following amounts as its safety stock?
- a. 150
- b. 350
- c. 500
- d. 650
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Lyle Co. has only one product line. For that line, the reorder point is 500 units, the lead time for production is three weeks,and the sales volume is estimated at 50 units per week. Lyle has established which of the following amounts as its safety stock?a. 150b. 350c. 500d. 650
2. Hamid Company consumes inventory of 100,000 units of components per year. The carrying cost per unit is RO 3.50. The fixed order cost is RO 20 per order. The production planning is 365-day year. The delivery time is three days.
a. Calculate and interpret the Economic Order Quantity (EOQ).
b. At what inventory level should Hamid Company place another order. Interpret.
The following information is derived from Fun & Game LLC financial statements. Annual usage of material is 1,000 units, average stock level is 1,400 units, re-order period is 6 – 10 weeks, minimum level is 800 units and normal rate of consumption is 150 units per week. Then calculate the re-order quantity.
a.
800 units
b.
1,200 units
c.
1,000 units
d.
400 units
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,...
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
- Harrowing Company has the following information: Annual demand =3,500 units Order size = 500 units Ordering cost per order =$400 Carryingcosts per unit for one year =$40 Lead time (maximum 20 days)=10days Maximumd use =25 units Work year =250days Required: a.Determine the economic order quantity for Harrowing b. Determine the reorder point. c. What is the safety stock needed to prevent stockouts?arrow_forward16. The ordering costs related to a product are P12.50 per order. The cost of carrying one item of inventory for one year is P16. The business sells 40,000 units of the product evenly throughout the year. At EOQ, total ordering costs per year and total carrying costs per year, respectively, must be A. P1,562.50 ; P1,562.50 C. P2,000 ; P2,000 D. P4,000 ; P4,000 B. P1,562.50 ; P2,560.00arrow_forwardElectronics Company produced 300 transistors per day, which go into inventory. It supplies 150 transistors per day to Oman Radio. The annual demand is 37,500. The inventory holding cost is $0.25 per transistor per year and the setup cost per production run is $200. Find: А. ЕOQ В. Production run length = Q*/p С. Number of production runs per year = D/Q* Maximum inventory levelarrow_forward
- 1. ABC operates 250 days in a year and sells an average of 500 units each day. On better days, sales may reach 800 units. The supplier delivers the inventory within 3 to 6 days after receiving the purchase orders from ABC but the average time is 4 days. Assuming normal operations, what would the expected minimum inventory level be for ABC? * 1500 units 2000 units 2800 units 4800 units 2. The target investors of the new issuance of the 800,000 P1,000-par value shares expect a return of 14% and a zero growth rate. If the management quantifies this return as P160 per share, what should the target issue price per share be? * P1,600.00 P1,400.00 P875.00 P1,142.96 3. A P1,000-par value preference share was issued for a net proceed of P1,100. It will be paying interest of 9% per annum. It has a liquidating value of P1,200 at the end of its 20-year term. The applicable tax rate to the entity is 30%. The effective cost of the preference share is closest to * 8.40% 9.40% 7.50% 5.88%arrow_forward1. The ordering costs related to a product are P12.50 per order. The cost of carrying one item of inventory for one year is P16. The business sells 40,000 units of the product evenly throughout the year. At EOQ, total ordering costs per year and total carrying costs per year, respectively, must be? 2. Data for Magaling Co.’s material X are as follows; annual usage : 12,600 units; Working days per year : 360 days normal lead time 20 days. The units of Material X are required evenly throughout the year. What is the reorder point?arrow_forwardme EOQ, reorder point, and safety stock Alexis Company uses 905 units of a product per year on a continuous basis. The product has a fixed cost of $49 per order, and its carrying cost is $5 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a safety stock. a. Calculate the EOQ. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.) c. Determine the reorder point. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity. ents un a. Alexis' EOQ is units. (Round to the nearest whole number.) eText edia Librai al Calculat r Resource Enter your answer in the answer box and then click Check Answer. ic Study 3 parts remaining es Clear All Check Answer unication Tools > OK 10 Type here to search 5/1 insertarrow_forward
- ne EOQ, reorder point, and safety stock Alexis Company uses 835 units of a product per year on a continuous basis. The product has a fixed cost of $41 per order, and its carrying cost is $4 per unit per year. It takes 5 days to receive a shipment after an order is placed, and the firm wishes to hold 10 days' usage in inventory as a ptions safety stock. a. Calculate the EOQ. b. Determine the average level of inventory. (Note: Use a 365-day year to calculate daily usage.) c. Determine the reorder point. d. Indicate which of the following variables change if the firm does not hold the safety stock: (1) order cost, (2) carrying cost, (3) total inventory cost, (4) reorder point, (5) economic order quantity. a. Alexis' EOQ is units. (Round to the nearest whole number.) b. Alexis' average level of inventory is units. (Round to the nearest whole number.) c. Alexis' reorder point is units. (Round to the nearest whole number.) Which of the following will change if the firm does not hold the…arrow_forward(D) Buckley Enterprise sells a product that cost $450 per unit and has a monthly demand of 5,000 units. The annual holding cost per unit is calculated as 5% of the unit purchase price. It costs the business $75 to place a single order. Currently the business places 12 orders each year. i) What is the total stock administrative cost of Buckley's current inventory policy? ii) Is this the entity's cost minimizing solution for this product each year? Explain.arrow_forwardTranscribed Image Text: You have been hired as a financial manager by Alpha Company which sells 2,700 of car batteries per year, and places orders for 600 of metals. The Company has no safety stocks. Moreover, the financial analyst estimates a 50% probability of no shortages in each cycle, and the likelihood of inventory shortages of 10, 20, and 30 units as 0.25, 0.15, and 0.10 respectively. The carrying cost per unit per year is $2. The stockout cost is $5, What is the optimal level of safety stock should you recommend? You plan to consider safety stock of 0, 10, 20, and 30 units.arrow_forward
- A company stocks an item that is consumed at the rate of 35 units each day. Every time an order is placed for new supply, $ 105 must be paid. A unit inventory held in stock will cost $ 0.15 d) What is the total cost if the order quantity is 205 more than EOQ? e) What is the optimum number of orders (rounded to the closest integer) that the company has to place each year? Assume that the company has a standing policy of not allowing shortages in demand.arrow_forwardThe following is Cullumber Company’s income statement for the past year. Sales revenue $336,000 Cost of goods sold 134,400 Gross margin 201,600 Operating expenses 145,600 Operating income $56,000 If the company wants to sell a new product that costs $49 wholesale while keeping the same markup structure, what will be the price of the new product? (Use the gross margin percentage and round final answer to 2 decimal places, e.g. 25,124.25.) Price of the new product $enter the price of the new product in dollars rounded to 2 decimal placesarrow_forward(E) Universal Enterprise sells a product that cost $450 per unit and has a monthly demand of 5,000 units. The annual holding cost per unit is calculated as 5% of the unit purchase price. It costs the business $75 to place a single order. Currently the business places 12 orders each year. i) What is the total stock administrative cost of Universal’s current inventory policy? ii) Is this the entity’s cost minimizing solution for this product each year? Explain.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Inventory management; Author: The Finance Storyteller;https://www.youtube.com/watch?v=DZhHSR4_9B4;License: Standard Youtube License