Cost of Acquiring Materials

An invoice for Part A, Part B and Part C is received from the Edison
Company. Invoice totals are: Part A P 8,600, Part B P5,060 and Part C
P 3,840. The shipment weights 1,400 kilograms and freight charges
are P 280. Weights for the respective materials are 630, 440 and 330
kilograms.
Requirement:
• Allocate freight to materials based on cost
• Allocate freight to materials based on shipping weight
Quantity to Order
On September 1, a company wants to determine the number of units
of Material X it should order for November delivery. The production
schedule calls for 4,200 units of Material X for September operations,
4,400 units for October and 4,700 units for November. On September
1, the inventory record shows 4,400 units on hand, 3,600 units on
order for September delivery, and 4,500 units on order for October
delivery. The inventory needed to begin December production is 3,600
units.
Required:
Compute thequantity to be ordered for November delivery.
Usage Forecast and Inventory Balances
On January 1, a materials analyst is asked to determine the number of units of
Item AZ to be ordered for March delivery. The production schedule calss for
4,800 units of AZ for January operations, 5,000 units for February, and 5,600
units for March. On January 1, the AZ inventory is 6,000 units, 3,800 units are
on order for January delivery, and 4,600 units are on order for February
delivery. The desired inventory level to begin second-quarter production is 80%
of the January 1 inventory.
Required:
• Compute the quantity to be ordered for March delivery.
• If the planned usage occurs and outstanding orders are received on expected
delivery dates, what is the number of units on hand (a) on March 1 and (b) on
March 31?
Economic Order Quantity
Stevens Inc. has an annual usage of 100 units of Item M, having a
purchase price of P55/ unit. The following date are applicable to Item
M:
Ordering Cost - P 5 per order
Carrying Cost Percentage - 15%
Required:
What is the EOQ?
Economic Order Quantity
Lee Equipment Company estimates a need for 2,250 Ajets next year at
a cost of P3/ unit. The estimated carrying cost is 20% and the cost to
place an order is P 12.
Required:
What is the EOQ?
EOQ
A material is purchased for $3 per unit. Monthly usage is 1,500 units,
the ordering cost is $50 per order, and the annual carrying cost is 40%.

• Required:
a. Compute the economic order quantity
Order Point
Starkville Company's usage of Material A is 9,600 units during 240
working days per year. Normal lead time and maximum lead time are
20 working days and 35 working days, respectively. Assuming
Material A will be required evenly throughout the year, what is the
safety stock and order point?