ArtOrgan,Ltd

question 56

Essay

ArtOrgan,Ltd.distributes mechanical replacements for human mitral heart valves.Its artificial valve has a demand of 12,765 units per year and sells for $7,900 per unit.The cost of ordering is $75 per order and the average carrying cost per unit per year is $150.Determine the economic order quantity.

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Definitions:

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Credit Sales

Sales made on account, allowing customers to pay for goods or services at a later date.

Direct Labor

The wages paid to employees who are directly involved in the production of goods or provision of services, considered a variable cost.

Direct Labor Rate

The cost per hour for labor directly involved in the production of goods or services.