Acme Industries is currently experiencing problems with its inventory of anvils.Its manager, Willy Coy currently orders the anvils in batches of 10,000.Four orders are placed during the year to meet the estimated sales demand of 40,000 units.Each order costs $20 and each unit costs $2 to carry.Mr.Coy maintains a safety stock of 500 anvils.Required:
b.What is the Economic Order Quantity for Acme Industries?
c.What is the average inventory if Acme uses the EOQ calculated in part b)and it still maintains its 500 units of safety stock?
d.What is Acme's annual savings in inventory costs by using the EOQ and maintaining its safety stock?
Definitions:
Elimination
In accounting, the process of removing intercompany transactions from the financial statements of a consolidated group.
Consolidated Financial Statements
Financial reports that aggregate all financial information of a parent company and its subsidiaries, showing the group's overall financial performance and position.
Parent's Share
The portion of equity interest in a subsidiary held by the parent company, reflecting its claim on the subsidiary's assets and income.
Unrealized Profits
Profits that have been recognized in the accounting records but have not yet been realized through the receipt or payment of cash or other assets.
Q8: In process costing the end of period
Q17: An important component in several of the
Q49: Assuming Hawk uses the FIFO method of
Q60: Using the stand-alone method with selling price
Q70: The costs of normal spoilage are usually
Q91: What is the amount of gross margin?<br>A)$1,475,000<br>B)$1,500,000<br>C)$1,047,250<br>D)$1,032,500<br>E)$1,007,425
Q107: The Income Tax Act classifies every amortizable
Q125: Sudbury Ore Company mines nickel ore for
Q175: Identify capital expenditures relevant to accomplishing strategic
Q181: The Cumberland Paint Company has two divisions.The