Acc 3333 Ch 20 In Class solns 2010

# Acc 3333 Ch 20 In Class solns 2010 - Chapter 20 In-Class...

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Chapter 20 In-Class Solutions 20-19 (20 min.) EOQ for manufacturer. 1. Relevant carrying costs per part per year: Required annual return on investment 15% × \$60 = \$ 9 Relevant insurance, materials handling, breakage, etc. costs per year 6 Relevant carrying costs per part per year \$15 With D = 18,000; P = \$150; C = \$15, EOQ for manufacturer is: = 2 18,000 \$150 \$15 × × = 600 units 2. Total relevant ordering costs = × P Q D = × \$150 600 000 , 18 = \$4,500 where Q = 600 units, the EOQ. 3. At the EOQ, total relevant ordering costs and total relevant carrying costs will be exactly equal. Therefore, total relevant carrying costs at the EOQ = \$4,500 (from requirement 2). We can also confirm this with direct calculation: costs carrying relevant Total = × C 2 Q = × \$15 2 600 = \$4,500 where Q = 600 units, the EOQ. 4. Purchase order lead time is half a month. Monthly demand is 18,000 units ÷ 12 months = 1,500 units per month. Demand in half a month is × 1,500 units or 750 units. Lakeland should reorder when the inventory of rotor blades falls to 750 units. 20-21 (20 min.) Economic order quantity for retailer, ordering and carrying costs. 1. D = 24,000, P = \$144, C = \$12 EOQ = 2(24,000) (\$144) \$12 = 758.9 2245 759 modems 2. TRC = DP QC     Q 2 + = 24,000 \$144 759 12     759 2 × × + = \$4,553 + \$4,554 = \$ 9,107

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3. Reorder point = Number of units Purchase-order sold per     lead time units of time × = 24,000 360 × 5 = 333.3 2245 333 modems 20-23 (20 min.) JIT production, relevant benefits, relevant costs. 1. Solution Exhibit 20-23 presents the annual net benefit of \$315,000 to Champion Hardware Company of implementing a JIT production system. 2. Other nonfinancial and qualitative factors that Champion should consider in deciding whether it should implement a JIT system include: a. The possibility of developing and implementing a detailed system for integrating the sequential operations of the manufacturing process. Direct materials must arrive when needed for each subassembly so that the production process functions smoothly. b.
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## This note was uploaded on 01/14/2011 for the course ACCT 3333 taught by Professor J.d during the Spring '08 term at Saint Mary's University Texas.

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Acc 3333 Ch 20 In Class solns 2010 - Chapter 20 In-Class...

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