Rolf Steps Is the Production Manager for a Local Manufacturing

question 42

Multiple Choice

Rolf Steps is the production manager for a local manufacturing firm.This company produces staplers and other items.The holding cost is $2 per unit per year.The cost of setting up the production line for this is $25.There are 200 working days per year.The production rate for this product is 80 per day.If the production order quantity is 200 units, what was the daily demand (rounded to the nearest whole unit) ?

• A)6 units
• B)7 units
• C)8 units
• D)9 units

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Definitions:

Perpetual Inventory System

An approach to inventory management where updates to inventory records are made in real-time after each purchase, sale, or return transaction.

Shrinkage

The loss of inventory that can occur due to theft, damage, or errors in a company's stock.

Adjusting Entries

Journal entries made at the end of an accounting period to update account balances before preparing financial statements.

Operating Expenses

Costs associated with the day-to-day functions of a business excluding the cost of goods sold.