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Expected Annual Usage of a Particular Raw Material Is 180,000

question 34

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Expected annual usage of a particular raw material is 180,000 units,and standard order size is 12,000 units.The invoice cost of each unit is $300,and the cost to place one purchase order is $80.Assuming the company does not maintain safety stock,the average inventory is:

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Definitions:

Gross Earnings

Total compensation earned by an employee.

Direct Labor Hour

A measure of labor input, which is the time spent by workers directly manufacturing a product.

Direct Materials

Direct materials are raw materials that are directly used in the manufacturing process of a product and are easily traceable to it.

Total Cost

The sum of all expenses incurred in the production of goods or services, including fixed and variable costs.

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