Problem. 6: Gator Office Supplies sells two models of fax machines. The wholesale cost of the Blue model is $ 100 and the cost of the Orange model is $ 150. The retail price of the Blue is $ 130 and of the Orange is $ 190. In any given month the store sells at most 2500 machines total and because of budget concerns management has earmarked no more than $ 600,000 per month to purchase inventory. How many units of each model should the manager order each month in order to maximize monthly profit? What is the maximum profit? Blue Orange $ ? ? ?

Problem. 6: Gator Office Supplies sells two models of fax machines. The wholesale cost of the Blue model is $ 100 and the cost of the Orange model is $ 150. The retail price of the Blue is $ 130 and of the Orange is $ 190. In any given month the store sells at most 2500 machines total and because of budget concerns management has earmarked no more than $ 600,000 per month to purchase inventory. How many units of each model should the manager order each month in order to maximize monthly profit? What is the maximum profit? Blue Orange $ ? ? ?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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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 economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
Required information [The following information applies to the questions displayed below.] Iguana, Inc., manufactures bamboo picture frames that sell for $20 each. Each frame requires 4 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $13 per hour. Iguana has the following inventory policies: Ending finished goods inventory should be 40 percent of next month's sales. Ending direct materials inventory should be 30 percent of next month's production. Expected unit sales (frames) for the upcoming months follow: March 365 April Мay 430 480 June 580 July August 555 605 Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $4,800 ($400 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $450 per month plus $0.50 per unit sold. Iguana, Inc., had $11,000 cash on hand…
8. A beauty supply store expects to sell 120 flat irons during the next year. It costs $1.60 to store one flat iron for one year. To reorder, there is a fixed cost of $6, plus $4.50 for each flat iron ordered. In what lot size and how many times per year should an order be placed to minimize inventory costs? how many flat irons per order how many orders per year
Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Each handisaw sells for $42. Wesley expects the following unit sales: January February March April May 3,400 3,600 4,100 3,900 3,300 Wesley's ending finished goods inventory policy is 20 percent of the next month's sales. Suppose each handisaw takes approximately 0.75 hour to manufacture, and Wesley pays an average labor wage of $18 per hour. Each handisaw requires two plastic components that Wesley purchases from a supplier at a cost of $3.50 each. The company has an ending direct materials Inventory policy of 25 percent of the following month's production requirements. Materials other than the plastic components total $4.50 per handisaw. Manufacturing overhead for this product includes $75,000 annual fixed overhead (based on production of 27,000 units) and $1.20 per unit variable manufacturing overhead. Wesley's selling expenses are 7 percent of sales…
Required information [The following information applies to the questions displayed below.]Iguana, Inc., manufactures bamboo picture frames that sell for $30 each. Each frame requires 4 linear feet of bamboo, which costs $2.50 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $14 per hour. Iguana has the following inventory policies: Ending finished goods inventory should be 40 percent of next month’s sales. Ending direct materials inventory should be 30 percent of next month’s production. Expected unit sales (frames) for the upcoming months follow: March 295 April 290 May 340 June 440 July 415 August 465 Variable manufacturing overhead is incurred at a rate of $0.20 per unit produced. Annual fixed manufacturing overhead is estimated to be $9,000 ($750 per month) for expected production of 5,000 units for the year. Selling and administrative expenses are estimated at $800 per month plus $0.50 per unit sold. Iguana,…
Required information [The following information applies to the questions displayed below.] Iguana, Incorporated, manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $3.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12 per hour. Iguana has the following inventory policies: Ending finished goods inventory should be 40 percent of next month's sales. • Ending direct materials inventory should be 30 percent of next month's production. Expected unit sales (frames) for the upcoming months follow: March April May June July August 320 340 390 490 465 515 Variable manufacturing overhead is incurred at a rate of $0.20 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $650 per month plus $0.50 per unit sold. Iguana, Incorporated, had…
Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Each handisaw sells for $40. Wesley expects the following unit sales: January 2,200 February 2,500 March 2,700 April 2,500 May 2,100 Wesley’s ending finished goods inventory policy is 35 percent of the next month’s sales. Suppose each handisaw takes approximately 0.65 hour to manufacture, and Wesley pays an average labor wage of $13.50 per hour. Each handisaw requires two plastic components that Wesley purchases from a supplier at a cost of $3.00 each. The company has an ending direct materials inventory policy of 10 percent of the following month’s production requirements. Materials other than the plastic components total $4.50 per handisaw. Manufacturing overhead for this product includes $66,000 annual fixed overhead (based on production of 24,000 units) and $0.90 per unit variable manufacturing overhead. Wesley’s selling expenses are 6 percent of…
MAY I ASK FOR THE SOLUTIONS AND ANSWERS TO NOS. 19 - 21. THANK YOU! ABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but may sometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, the supplier may take 7 days. Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also an opportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450. If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order ten days worth of inventory. (A) Reorder Point 1. What should be the reorder point in boxes? 2. How much would the normal lead time usage be? 3. How much should ABC keep as safety stock? (B) Economic Order Quantity 4. What is the annual demand for the boxes of candles? 5. How much is the carrying cost of one box of…
Required information [The following information applies to the questions displayed below.] Iguana, Incorporated, manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $13 per hour. Iguana has the following inventory policies: ⚫ Ending finished goods inventory should be 40 percent of next month's sales. • Ending direct materials inventory should be 30 percent of next month's production. Expected unit sales (frames) for the upcoming months follow: March April May June July August 310 320 370 470 445 495 Variable manufacturing overhead is incurred at a rate of $0.50 per unit produced. Annual fixed manufacturing overhead is estimated to be $4,800 ($400 per month) for expected production of 4,800 units for the year. Selling and administrative expenses are estimated at $500 per month plus $0.50 per unit sold. Iguana, Incorporated, had…
Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Each handisaw sells for $50. Wesley expects the following unit sales: 2, 000 2, 500 3, 100 2, 900 January February March April May 2, 200 Wesley's ending finished goods inventory policy is 20 percent of the next month's sales. Each handisaw takes approximately 0.30 hours to manufacture, and Wesley pays an average labor wage of $15.00 per hour. Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $5.00 each. The company has an ending raw materials inventory policy of 10 percent of the following month's production requirements. Materials other than the housing unit total $4.00 per handisaw. Manufacturing overhead for this product includes $60,000 annual fixed overhead (based on production of 24,000 units) and $.80 per unit variable manufacturing overhead. Wesley's selling expenses are 5 percent of sales dollars, and…
Fisk Corporation is trying to improve its inventory control system and has installed an online computer at its retail stores. Fisk anticipates sales of 60,500 units per year, an ordering cost of $12 per order, and carrying costs of $1.20 per unit.a. What is the economic ordering quantity?___________Units b. How many orders will be placed during the year? __________Orders c. What will the average inventory be? ____________Units d. What is the total cost of ordering and carrying inventory? $____________
Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Each handisaw sells for $46. Wesley expects the following unit sales: January 3,800 February 4,000 March 4,500 April 4,300 May 3,700 Wesley’s ending finished goods inventory policy is 25 percent of the next month’s sales.Suppose each handisaw takes approximately 0.60 hours to manufacture, and Wesley pays an average labor wage of $22 per hour.Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $5.00 each. The company has an ending direct materials inventory policy of 20 percent of the following month’s production requirements. Materials other than the housing unit total $4.50 per handisaw.Manufacturing overhead for this product includes $72,000 annual fixed overhead (based on production of 27,000 units) and $1.20 per unit variable manufacturing overhead. Wesley’s selling expenses are 7…