Jacob Manages a Candy Store in a High Traffic Shopping $= 100$

question 17

Essay

Jacob manages a candy store in a high traffic shopping mall. He has collected the following information:
Weekly demand for small candy boxes $= 100$ boxes
Cost to place one purchase order with the box supplier $= \$ 15.80$
Cost to hold one box for one year in inventory $= \$ 3.45$
Lead time $= 3$ weeks
Weeks in a year $= 52$ weeks
Answer the next four questions based on the given data.
a.What is the economic order quantity (EOQ)?
b.What is the average inventory level (i.e., cycle inventory)?
c.What is the total annual order and inventory-holding cost?
d.If a fixed-period system (FPS) is adopted, what is the replenishment level (M) without safety stock?

Distinguish between consumer surplus and producer surplus.

Evaluate the role of efficiency and equity in economic policies.

Calculate total, consumer, and producer surplus from given market scenarios.

Understand the effects of price controls on market surplus.

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Definitions:

Work in Process Account

An account that tracks the costs associated with the production of goods that are not yet completed.

Job-order Costing System

An accounting system that determines and accumulates costs separately for each job or batch of goods produced.

Manufacturing Overhead Applied

The allocation of manufacturing overhead costs to individual units of production, based on a predetermined overhead rate.

Underapplied Overhead

Occurs when the allocated manufacturing overhead cost is less than the actual manufacturing overhead cost incurred, leading to a discrepancy that needs to be adjusted in the accounting records.