Lakeland Company produces lawn mowers and purchases 2,800 units of a rotor blade part each quater...
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Lakeland Company produces lawn mowers and purchases 2,800 units of a rotor blade part each quater at a cost of $60 per unit. In addition, the holding cost is $10 per unit per year. The relevant ordering cost per purchase order is $250. Required A, Calculate Lakeland's EOQ for the rotor blade part. (5 marks) B, Calculate Lakeland's annual relevant ordering costs for the EOQ calculated in requirement 1. (5 marks) C, Calculate Lakeland's annual relevant holding costs for the EOQ calculated in requirement 1 (5 marks) D, Assume that demand is uniform throughout the year and known with certainty so that there is no need for safety stocks. The purchase-order lead time is half a month. Calculate Lakeland's reorder level for the rotor blade part. (5 marks) E, Supplier offer discount 15% if the entity purchases from 5,000 units per order. i, In financial term, whether the entity accept the offer of supplier? (Compare total inventory cost include purchase cost, holding cost and ordering cost) (10 marks) ii, List and explain 3 other factors that the entity should consider before accepting offer of the supplier? (5 marks) Lakeland Company produces lawn mowers and purchases 2,800 units of a rotor blade part each quater at a cost of $60 per unit. In addition, the holding cost is $10 per unit per year. The relevant ordering cost per purchase order is $250. Required A, Calculate Lakeland's EOQ for the rotor blade part. (5 marks) B, Calculate Lakeland's annual relevant ordering costs for the EOQ calculated in requirement 1. (5 marks) C, Calculate Lakeland's annual relevant holding costs for the EOQ calculated in requirement 1 (5 marks) D, Assume that demand is uniform throughout the year and known with certainty so that there is no need for safety stocks. The purchase-order lead time is half a month. Calculate Lakeland's reorder level for the rotor blade part. (5 marks) E, Supplier offer discount 15% if the entity purchases from 5,000 units per order. i, In financial term, whether the entity accept the offer of supplier? (Compare total inventory cost include purchase cost, holding cost and ordering cost) (10 marks) ii, List and explain 3 other factors that the entity should consider before accepting offer of the supplier? (5 marks)
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Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ
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