Issuu on Google+

Management Accounting F2 Material cost Class practice question 1 Which of the following is not a stockholding cost: A B C D The opportunity cost of capital tied up The cost of insurance Shipping and handling costs Stock obsolescence 2 The objective of holding buffer inventory is to take advantage of quantity discounts. Is this statement TRUE or FALSE? A True B False 3 A company wishes to minimize its inventory costs. Order costs are $10 per order and holding cost is $0.10 per unit. Fall Co estimates annual demand to be 5,400 units. The economic order quantity is_______ units. 4 The demand for a product is 12,500 units for a three month period. Each unit of product has a purchase price of $15 and ordering costs are $20 per order placed. The annual holding cost of one unit of product is 10% of its purchase price. What is the Economic Order Quantity (to the nearest unit)? A 577 B 816 C 866 D 1,155 5 A manufacturer uses 100,000 components costing $1each at a constant rate throughout the year. The cost of making a single order for more components is $10 and the holding costs for each component are 0.5% of the average inventory value. What is the EOQ? A 1,411 B 14,142 C 20,000 Prepared by: Muzzammil Malik 1

material cost

Related publications