Leafair Rickson Co. empties itsinventory stores every 18.25 days.The firm orders 534,000 units to refillits inventory at a cost of $0.36 perunit. If the firm has a annual per-unitcarrying cost of $1.05, what is thefirms total inventory cost per year?23

Step 1:To calculate the total inventory cost per year for the firm, we need to consider both the…

Answered: Leafair Rickson Co. empties its…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 15PROB

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Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the annual ordering cost. 2. Compute the annual carrying cost. 3. Compute the cost of Ottiss current inventory policy. Is this the minimum cost? Why or why not?
Ranger Industries has provided the following information at June 30: Other information: Average selling price, 196 Average purchase price per unit, 110 Desired ending inventory, 40% of next months unit sales Collections from customers: In month of sale20% In month after sale50% Two months after sale30% Projected cash payments: Inventory purchases are paid for in the month following acquisition. Variable cash expenses, other than inventory, are equal to 25% of each months sales and are paid in the month of sale. Fixed cash expenses are 40,000 per month and are paid in the month incurred. Depreciation on equipment is 2,000 per month. REQUIREMENT You have been asked to prepare a master budget for the upcoming quarter (July, August, and September). The components of this budget are a monthly sales budget, a monthly purchases budget, a monthly cash budget, a forecasted income statement for the quarter, and a forecasted September 30 balance sheet. The worksheet MASTER has been provided to assist you. Ranger Industries desires to maintain a minimum cash balance of 8,000 at the end of each month. If this goal cannot be met, the company borrows the exact amount needed to reach its goal. If the company has a cash balance greater than 8,000 and also has loans payable outstanding, the amount in excess of 8,000 is paid to the bank. Annual interest of 18% is paid on a monthly basis on the outstanding balance.
A company stocks an item that is consumed at the rate of 50 units per day. It costs the company P20 each time an order is placed. An inventory unit held for a week will cost P0.35. (a) Determine the optimum inventory policy assuming a lead time of 1 week. (b) Determine the optimum number of orders per year (365 days a year).
GB Inc. sells 12,000 gallons of ice cream each month from its central storage facility. Monthly carrying costs are P0.10 per gallon and ordering costs are P50 per order. Ignore potential stockout costs and assume a 30-day month. What is the total inventory cost for the month? P346 per month P500 per month P1,000 per month P650 per month
TS Co has daily demand for ball bearings of 40 a day for each of the 250 working days (50 weeks) of the year. The ball bearings are purchased from a local supplier for $2 each. The cost of placing an order is $64 per order, regardless of the size of the order. The inventory holding costs, expressed as a percentage of inventory purchase price, is 25% per annum. What is the economic order quantity?
On average, a firm sells $2,000,000 in merchandise a month. It keeps inventory equal to one-half of its monthly sales on hand at all times. If the firm analyzes its accounts using a 365-day year, what is the firm’s inventory conversion period (ICP)? (Hint: ICP = 365/(sales/inventory)
The annual inventory requirement at the C &E Enterprises is P2,500 units. Each inventory item has a value of P5,000. Ordering cost is P50.00. Carrying cost is 20% of average inventory. Find the following: a. Optimal number of order per year b. Economic order quantity c. Annual carrying cost d. Annual Ordering cost e. Total annual inventory cost
Wayne's Wells has sales for the year of P48,900 and an average inventory 21 of P8,800. The cost of goods sold id equal to 60 percent of sales and the profit margin is five percent. How many days on the average does it take the firm to sell an inventory item?
A store sells a product that has the annual demand of 16,156 units. It purchases the product from supplier A for $74.4 per unit. The unit inventory carrying cost per year is 14 percent of the unit purchase cost. The cost to place and process an order from the supplier is $107 per order. Supplier A has a delivery lead time of 7 days. The store operates 300 days a year. Assume EOQ model is appropriate. What is the optimal total annual inventory and purchase cost for the store? Use at least 4 decimal places.
1. The ordering costs related to a product are P12.50 per order. The cost of carrying one item of inventory for one year is P16. The business sells 40,000 units of the product evenly throughout the year. At EOQ, total ordering costs per year and total carrying costs per year, respectively, must be? 2. Data for Magaling Co.’s material X are as follows; annual usage : 12,600 units; Working days per year : 360 days normal lead time 20 days. The units of Material X are required evenly throughout the year. What is the reorder point?
Sapphire Aerospace operates 52 weeks per year, and its costof goods sold last year was $6,500,000. The firm carries eightitems in inventory: four raw materials, two work-in-processitems, and two finished goods. Table 12.3 shows last year’saverage inventory levels for these items, along with their unitvalues.a. What is the average aggregate inventory value?b. How many weeks of supply does the firm have?c. What was the inventory turnover last year?
The annual inventory requirement at the C &E Enterprises is P2,500 units. Each inventory item has a value of P5,000. Ordering cost is P50.00. Carrying cost is 20% of average inventory. a. Optimal number of order per year b. Economic order quantity c. Annual carrying cost d. Annual Ordering cost e. Total annual inventory cost

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Leafair Rickson Co. empties its inventory stores every 18.25 days. The firm orders 534,000 units to refill its inventory at a cost of $0.36 per unit. If the firm has a annual per-unit carrying cost of $1.05, what is the firms total inventory cost per year? 23