I. Multiple choice questions:
Question 1. The purchase price of an inventory item is $25 per unit. In each
three month period the usage of the item is 20,000 units. The annual holding costs
associated with one unit equate to 6% of its purchase price. The cost of placing an
order for the item is $20.
What is the economic order quantity for the inventory item (to the nearest whole
unit)?
$
Question 2. ACB Co gradually receives its re-supply of inventory at a rate of
10,000 units a week. Other information is available as follows.
Weekly demand
5,000 units
Set-up costs for each production run
$125
Weekly cost of holding one unit
$0.0025
What is the economic production run?
a. 1,577 units
b.
7,071 units
c.
31,623 units
d. 894,427 units
Question 3. The demand for a product is 12,500 units for a three month period.
Each unit of product has a purchase price of $15 and ordering costs are $20 per order
placed. The annual holding cost of one unit of product is 10% of its purchase price. What
is the Economic Order Quantity (to the nearest unit)?
a. 577
b. 816
c. 866
d. 1,155
Question 4.
A company wishes to minimize its inventory costs. Order costs are
$10 per order and holding costs are
$0.10 per unit per month. Fall Co estimates annual
demand to be 5,400 units. What is the economic order quantity?
a.
949 units
b.
90,000 units
c.
1,039 units
d.
300 units
HANOI UNIVERSITY OF INDUSTRY
ACCOUNTING AND AUDITING
DEPARTMENT
ASSIGNMENT SHEET - LESSON 3
MODULE: Management accounting (F2)
DEPARTMENT OF ACCOUNTING INFORMATION SYSTEMS
