Chat with AI
Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402 Exercise 4
Ordering and Carrying Costs
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 Ottis's current inventory policy. Is this the minimum cost? Why or why not?
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 Ottis's current inventory policy. Is this the minimum cost? Why or why not?
Explanation
Verified
Verified
(1)Calculation of Annual Ordering Cost o...
Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Why don’t you like this exercise?
Other Minimum 8 character and maximum 255 character
Character 255
