Deli Pizza is a new pizza restaurant that opened two years ago in Seksyen 7, Shah...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Deli Pizza is a new pizza restaurant that opened two years ago in Seksyen 7, Shah Alam. The restaurant is near to a college campus and some of the part-time workers are students from the college. The owner of Deli Pizza, Mr. Hady is concern about the stock level of its restaurant, particularly cheese as the most expensive material in making pizza. Mr. Hady wants to ensure that the cheese inventory is sufficient as needed and there is no stock surplus that will increase holding cost. Mr. Hady has asked one of his part-time workers who is also a final year accounting student, regarding any formal model to order the cheese. The staff has suggested to use the Economic Order Quantity (EOQ) model in planning inventory. Currently the cheese is ordered in blocks at RM17.50 per block at order size of 400 blocks. Each year the restaurant uses an average 14,000 blocks of cheese. The cost of carrying one block of cheese is 10% of its purchase price. It costs the restaurant RM40 to place and receive an order. Required: a. Based on the current order size, calculate the total cost of ordering and carrying the cheese. (4 marks) b. Determine the order size of the cheese if the restaurant were to change to the EOQ model. (3 marks) c. If the restaurant uses the EOQ model, how many numbers of orders per year? How does this compare to the current reorder policy? (3 marks) Deli Pizza is a new pizza restaurant that opened two years ago in Seksyen 7, Shah Alam. The restaurant is near to a college campus and some of the part-time workers are students from the college. The owner of Deli Pizza, Mr. Hady is concern about the stock level of its restaurant, particularly cheese as the most expensive material in making pizza. Mr. Hady wants to ensure that the cheese inventory is sufficient as needed and there is no stock surplus that will increase holding cost. Mr. Hady has asked one of his part-time workers who is also a final year accounting student, regarding any formal model to order the cheese. The staff has suggested to use the Economic Order Quantity (EOQ) model in planning inventory. Currently the cheese is ordered in blocks at RM17.50 per block at order size of 400 blocks. Each year the restaurant uses an average 14,000 blocks of cheese. The cost of carrying one block of cheese is 10% of its purchase price. It costs the restaurant RM40 to place and receive an order. Required: a. Based on the current order size, calculate the total cost of ordering and carrying the cheese. (4 marks) b. Determine the order size of the cheese if the restaurant were to change to the EOQ model. (3 marks) c. If the restaurant uses the EOQ model, how many numbers of orders per year? How does this compare to the current reorder policy? (3 marks)
Expert Answer:
Answer rating: 100% (QA)
Required a I Ordering cost Annual Usage x ordering cost per order Order size Ordering cost 14000 ... View the full answer
Related Book For
Accounting Information Systems The Processes and Controls
ISBN: 978-1118162309
2nd edition
Authors: Leslie Turner, Andrea Weickgenannt
Posted Date:
Students also viewed these organizational behavior questions
-
Tyrus bought a trailer two years ago in which to transport his bronco horses to rodeos and other events. The trailer, which had no salvage value , cost him $20,000 and was depreciated by the...
-
Identify an existing organisation in an industry of your choice. The organisation can be either a profit or non-profit seeking organisation. If it is necessary, you may use a fictitious name for the...
-
College Town Pizzas owner bought his current pizza oven two years ago for $10,500, and it has one more year of life remaining. He is using straight-line depreciation for the oven. He could purchase a...
-
Perhaps more surprising to Mr. Pitkin was a proposal by the VP of Marketing to make a major investment in market share by increasing promotional expenditures by $2.5 million during 1998-2000. Sales...
-
It has been over 25 years since Julia graduated with a major in aeronautical engineering, and she has been quite successful in her career as well as in managing her personal finances. She has moved...
-
Mackenzie Consulting computes the cost of each consulting engagement by adding a portion of firmwide overhead costs to the labor cost of the consultants on the engagement. The overhead costs are...
-
Using the C APM, what would the expected rate of return for a stock with a beta of 1.3 be when the risk-free rate is 4 percent and the expected market risk premium is 5 percent? a. 5.3% b. 8.6% c....
-
Clark and Julie Anderson are interested in purchasing a new boat and have limited their choice to one of three boats manufactured by Sea Ray, Inc.: the 220 Bowrider the 230 Overnighter, and the 240...
-
37 222@@@8JX85888588888588FFFFFF9G998[ 2 3 4 8 -NM-565 CASH Buenaflorshoes Unadjusted Trial Balance At the end of February 28, 2021 DEBIT 495,180.00 ACCOUNTS RECEIVABLE 236,000.00 7 SUPPLIES...
-
Ricardo works for Bank B and is talking about loans with a consumer. He provides the consumer with a general explanation regarding the basic qualifications of a loan. Although the consumer plans to...
-
Explorers in the jungle find an ancient monument in the shape of a large isosceles triangle as shown. The monument is made from tens of thousands of small stone blocks of density = 800 kg/m'. The...
-
Name two quasi-governmental entities.
-
Where is the IASB based?
-
An auditor's risk of misstatement of accounts receivable is least likely to increase if there is a. An increase in customer complaints about their accounts. b. A general slowdown in cash collections....
-
An auditor's purpose in reviewing credit ratings of customers with delinquent accounts receivable most likely is to obtain evidence concerning management's assertions about a. Valuation or...
-
Can a company charge any proposed dividends to its income statement?
-
16. RD Company's trial balance has the following account balances at the end of the last accounting period. Cash $40,000 Prepaid Insurance 3,500 Accounts Receivable 15,000 Accounts Payable 9,000...
-
Determine the annual percentage yield for a loan that charges a monthly interest rate of 1.5% and compounds the interest monthly.
-
Why would the training of employees be an impediment to updating legacy systems?
-
Identify whether each of the following accounting positions or duties involves authorization, recording, or custody: Cashier Payroll processor Credit manager Mailroom clerk Data entry clerk ...
-
Describe the purpose of each of the following parts of a manual system: a. Source document b. Turnaround document c. General ledger d. General journal e. Special journal f. Subsidiary ledger
-
What is synergy?
-
Your new insight into investment policy, especially the link between P/E and PBR, and the rate of return on the investment.
-
Show how the share price of a very profitable company which invests at a rate of return that is higher than the required rate of return can still drop.
Study smarter with the SolutionInn App