Demand for a product is 12,000 units per year. Every time an order is made, the company must pay $15.00 per order. The cost to hold an order in inventory is $2.00 per unit per year. Calculate the cost if the company orders 3,000 units each time.
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A: Economic order Quantity (EOQ) = [(2*Annual Demand * Set up cost)/Carrying cost]
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A:
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- Company A wants to earn $5,000 profit in the month of January. If their fixed costs are $10,000 and their product has a per-unit contribution margin of $250, how many units must they sell to reach their target income? A.20 B. 40 C. 60 D. 120Ottis, 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?Maple Enterprises sells a single product with a selling price of $75 and variable costs per unit of $30. The companys monthly fixed expenses are $22,500. What is the companys break-even point in units? What is the companys break-even point in dollars? Construct a contribution margin income statement for the month of September when they will sell 900 units. How many units will Maple need to sell in order to reach a target profit of $45,000? What dollar sales will Maple need in order to reach a target profit of $45,000? Construct a contribution margin income statement for Maple that reflects $150,000 in sales volume.
- If a company has fixed costs of $6.000 per month and their product that sells for $200 has a contribution margin ratio of 30%, how many units must they sell in order to break even? A. 100 B. 180 C. 200 D. 2,000Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90. The companys monthly fixed expenses are $180,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of October when they will sell 10,000 units. How many units will Cadre need to sell in order to realize a target profit of $300,000? What dollar sales will Cadre need to generate in order to realize a target profit of $300,000? Construct a contribution margin income statement for the month of August that reflects $2,400,000 in sales revenue for Cadre, Inc.Kerr Manufacturing sells a single product with a selling price of $600 with variable costs per unit of $360. The companys monthly fixed expenses are $72,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of January when they will sell 500 units. How many units will Kerr need to sell in order to realize a target profit of $120,000? What dollar sales will Kerr need to generate in order to realize a target profit of $120,000? Construct a contribution margin income statement for the month of June that reflects $600,000 in sales revenue for Kerr Manufacturing.
- A company produces two products. E and F in batches of 100 units. The production and cost data are: The company can only perform 12,000 set-ups each period yet there is unlimited demand for each product. What is the differential profit from producing product E instead of product F for the year? A. $216,000 B. $204,000 C. $12,000 D. $54,000Marlin Motors sells a single product with a selling price of $400 with variable costs per unit of $160. The companys monthly fixed expenses are $36,000. What is the companys break-even point in units? What is the companys break-even point in dollars? Prepare a contribution margin income statement for the month of November when they will sell 130 units. How many units will Marlin need to sell in order to realize a target profit of $48,000? What dollar sales will Marlin need to generate in order to realize a target profit of $48.000? Construct a contribution margin income statement for the month of February that reflects $200,000 in sales revenue for Marlin Motors.Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An order to replenish the part requires a lead time of five days. Required: 1. Calculate the reorder point, using Equation 20.3. 2. Graphically display the reorder point, where the vertical axis is inventory (units) and the horizontal axis is time (days). Show two replenishments, beginning at time zero with the economic order quantity in inventory. 3. What if the average usage per day of the part is 500 units but a daily maximum usage of 575 units is possible? What is the reorder point when this demand uncertainty exists?
- Klamath Company produces a single product. The projected income statement for the coming year is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. 2. Suppose 10,000 units are sold above break-even. What is the operating income? 3. Compute the contribution margin ratio. Use the contribution margin ratio to compute the break-even point in sales revenue. (Note: Round the contribution margin ratio to four decimal places, and round the sales revenue to the nearest dollar.) Suppose that revenues are 200,000 more than expected for the coming year. What would the total operating income be?C E H The ABC Semi Conductor Company purchase 40,000 units of mother board each year at a cost of $30.00 per unit. The ordering cost is $10.00 per order, and the annual holding cost is estimated at 15% of the unit value. 1. What is the EOQ for the ABC? 2. What is the total annual inventory cost for the mother board if it is ordered in economic quantities? 3. How many orders should be placed each year? D Demand 40000 units H Holding Cost S Ordering Cost 4.5 $/unit/yr 10 $/order Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Quantity Average Total Holding Cost Total Ordering Cost Total COST = 100 200 300 400 500 1000 2000Firm B's demand for a product is 10 units per month. Its supplier charges an ordering cost of $5 per order and $10 per unit with a 10% discount for orders of 25 units or higher. Firm B incurs a 30% annual holding cost. How much does Firm B save each year (including purchasing, ordering, and holding costs) if it purchases enough units to get the discount? $122.25 $6.00 $2.25 $120.00