In P, assume that the company desires a safety stock of 500 gallons. In P, Lopez Chemical
Question:
In P, Lopez Chemical Inc. requires 20,000 gallons of material annually; the cost of placing an order is $20; the annual carrying cost per gallon is $5.
Required:
1. Compute the average number of gallons in inventory.
2. Compute the total carrying cost.
3. Compute the total order cost. Did it differ from your answer in P2-3? Why?
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Related Book For
Principles of Cost Accounting
ISBN: 978-1305087408
17th edition
Authors: Edward J. Vanderbeck, Maria Mitchell
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