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Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787 Exercise 23
ORDERING AND CARRYING COSTS
Larsen, Inc., uses 160,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is $60. The cost of holding one unit of inventory for one year is $7.50. Currently, Larsen places 40 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 Larsen's current inventory policy. Is this the minimum cost? Why or why not?
Larsen, Inc., uses 160,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is $60. The cost of holding one unit of inventory for one year is $7.50. Currently, Larsen places 40 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 Larsen's current inventory policy. Is this the minimum cost? Why or why not?
Explanation
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We are given the following costs of L In...
Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
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