CountD uses the Economic Order Quantity (EOQ) to manage its welding rods inventory. Welding rods are used in the manufacturing of stainless-steel tables. One welding rod weighs 50 grams (g) and two rods per table are used. CountDs welding rods supplier informed them that for the 2023 financial year for orders of at least 160 kilograms (kg) per order, the supplier will offer a 2,5% discount on the purchase price of R80 per kg. For orders smaller than 100 kg per order the purchase price will increase to R90 per kg. The supplier only sells the welding rods in kg quantities. The supplier charges an administrative fee of R60 per order and the CountDs holding costs per kilogram is R4,60 per annum. CountD budgeted to manufacture 4 800 tables in the 2023 financial year.

Cost/Income	Calculation	R
Purchase price difference	(4 800 x 0,05 x 2 rods) x (R90 x 0,25) = 480kg x R22,50	10 800
Ordering costs difference	= = 111,9 (111,9 kg 160 kg) x R60	2 886
Net relevant incremental cost of ordering		13 686
Conclusion: The suppliers offer should not be accepted

Concerning CountDs decision about whether to accept their welding rods suppliers offer, critically evaluate the provided working paper and the related information.

- Focus on the application of costing principles; and

- Review workings for errors and/ or omissions, and where applicable, provide correct workings.