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Ordering Cost, Carrying Cost, and Total Inventory-Related Cost

Zellen Company purchases 8,000 units of Product Beta each year in lots of 600 units per order. The cost of placing one order is $6, and the cost of carrying one unit of product in inventory for a year is $1.10.

Required:

1. How many orders for Beta does Zellen place per year?

2. What is the total ordering cost of Beta per year?

3. What is the total carrying cost of Beta per year?

4. What is the total cost of Zellen's inventory policy for Beta per year?

5. Conceptual Connection: Is Zellen's order size equal to the EOQ amount?

How could Zellen get closer to EOQ without actually figuring out the economic order quantity?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92771905

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