Taizhou Products Uses 800 Units of a Product Per Year

question 285

Essay

Taizhou Products uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days usage in inventory.
(a) Calculate the economic order quantity (EOQ).
(b) Determine the reorder point. (Assume a 360-day year.)

Identify factors that enhance or diminish the likelihood of reference group influence.

Understand the concept of social influence and its impact on consumer behavior.

Grasp the factors affecting relationship dynamics, such as propinquity.

Comprehend the phenomenon of deindividuation and its social implications.

---

Definitions:

Contribution Margin

The amount by which sales revenue exceeds variable costs, contributing towards covering fixed costs and generating profit.

Variable Factory Overhead

Costs that vary with the volume of production and include expenses such as indirect materials and utilities.

Absorption Costing

An accounting method that includes all direct costs and overhead expenses related to the production of a product in its cost base.

Variable Costing Income Statement

A financial statement format that only includes variable costs as product costs, with fixed manufacturing overhead treated as a period expense.