Scenario 9.1 The Talbot Company Uses Electrical Assemblies to Produce an Array

question 127

Multiple Choice

Scenario 9.1
The Talbot Company uses electrical assemblies to produce an array of small appliances.One of its high cost / high volume assemblies,the XO-01,has an estimated annual demand of 8,000 units.Talbot estimates the cost to place an order is $50,and the holding cost for each assembly is $20 per year.The company operates 250 days per year.
-Use the information in Scenario 9.1.What is the economic order quantity for the XO-01?

• A)less than or equal to 100 units
• B)greater than 100 units but less than or equal to 180 units
• C)greater than 180 units but less than or equal to 250 units
• D)greater than 250 units

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Definitions:

Assets

Resources owned or controlled by a business, expected to produce economic value or future benefits for the company.

Owner's Equity

The amount of ownership interest that the owner of a sole proprietorship or partners in a partnership have in their business, similar to stockholders' equity in a corporation.

Journal Format

A structured way of recording financial transactions in chronological order, typically used in bookkeeping and accounting.

Reference Column

A column in accounting journals where cross-references to ledger account numbers or other relevant documentation are noted.