I-Asgn6 - LESSON 6 Assignment Question 1 (12 marks)...

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LESSON 6 Assignment Question 1 (12 marks) Computer question Before you attempt this question, you should work through Computer illustration 6-2 in the Lesson Notes. Description Yales Jewellers Inc. purchases 30,000 one-quarter-carat diamonds each year for mountings in various settings. Pertinent information relating to the diamonds is given below: Purchase cost per diamond €200 Cost to carry one diamond in inventory for one year 5 Cost of placing one order to the company’s supplier 40 The maximum order that the insurance company will permit is 1,500 diamonds. The minimum order that the supplier will permit is 300 diamonds, with all orders required to be in multiples of 300 diamonds. The company has been purchasing in the maximum allowable volume of 1,500 diamonds per order. Required Use the procedure described below to complete worksheet L6Q1. From this worksheet, answer the following questions: a. (6 marks) What is the optimum quantity for the company’s diamond orders? b. (4 marks) What is the annual cost savings that will be realized if the company purchases in the volume you have determined in (1) above, as compared to its present purchase policy? c. (2 marks in total) Use the completed worksheet to perform the following what-if analysis: (i) (1 mark) What is the EOQ if the annual quantity used is 60,000 units instead of 30,000 (in cell C7)? Keep the order sizes unchanged. (ii) (1 mark) What is the EOQ if the cost of placing an order decreases to €15 (in cell C11), with the annual quantity unchanged at 30,000 units? Management Accounting Fundamentals Assignment 6 1
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Procedure You have been provided with a partially completed worksheet L6Q1. Complete the worksheet by following these steps: 1. Open the file MA1L6Q1. 2. Examine the layout of the worksheet. 3. Note that rows 5 to 13 have been used as a data table. Cells C7, C9, and C11 in the data table need to be filled in. 4. After filling in the data table, display the table for part 1 (rows 14 to 24). Note that the table is completely empty with the exception of labels and lines. Also note that cells B18 to B21 are filled with xxx. Replace these xxx with the corresponding formula labels and centre them. See cell B17 for an example. Note that the formula labels you enter in these cells are not intended to produce computation results but merely serve as labels for ease of reference. 5. Complete the EOQ table (in rows 17 to 21). Also enter the appropriate formula in cell B23. ( Hint: Use the MINA function.) 6. Enter the appropriate formulas (not values) in cells B29, B31, and B32. Use the HLOOKUP function in cell B29, looking up the total annual cost for the current order size in cell B27 in the EOQ table in cells C16 to G21. 7.
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This note was uploaded on 06/07/2011 for the course ACCT 101 taught by Professor None during the Spring '11 term at University of Illinois, Urbana Champaign.

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I-Asgn6 - LESSON 6 Assignment Question 1 (12 marks)...

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