Q1.Suppose Big Box Office Supply (BBOS) purchases 100,000 office chairs every year. Ordering costs are $95.00 per
Question:
Q1.Suppose Big Box Office Supply (BBOS) purchases 100,000 office chairs every year. Ordering
costs are $95.00 per order and carrying costs are $3.75 per chair. What is BBOS’s total inventory
cost per year, including both carrying costs and ordering costs, if BBOS orders the EOQ of office
chairs?
1A.Using the data from problem 1, Big Box Office Supply (BBOS) is able to negotiate a reduction
in the carrying costs to $3.50 per chair, but BBOS’s chair supplier offers a quantity discount of $0.25
per chair if BBOS orders 5,000 chairs at a time rather than the EOQ. Determine the before–tax benefit
or loss of accepting the quantity discount. (Assume the carrying cost remains at $3.50 per chair
whether or not the discount is taken.)
isnt the purchase price is 95$
Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan