Annual usage is 6000 units @ Rs 20 per unit Cost of placing an order is Rs 60 and annual carrying cost of one unit is 10% of inventory value EOQ = __________.
A. 600 units
B. 750 units
C. 1200 units
D. 1250 units
Answer: Option A
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Related Questions on Costing
Basic objective of cost accounting is ________
A. tax compliance.
B. financial audit.
C. cost ascertainment.
D. profit analysis.
Process costing is suitable for ________.
A. hospitals
B. oil refing firms
C. transport firms
D. brick laying firms
The cost which is to be incurred even when a business unit is closed is a _____.
A. imputed cost
B. historical cost
C. sunk cost
D. shutdown cost
Annual Usage(A): 6000
Ordering Cost(O): 60
Carrying Cost(C): 20*10%= 2
EOQ = √(2*A*O)/C
= √((2*6000*60)/2)
= 600
Correct Answer: Option (A)
Explain the scope of account
The following data have been extracted from the book of sunshine industries ltd.for the year
According to cost accounting there is a proper formula to calculate:
EOQ =Under root of ( 2*Annual consumption*Ordering cost)/(Unit cost*Carrying cost)
so put values in formula like: under root of (2*6000*60)/(10*20) =720000/200 = 3600
so after removing square root from 3600 the answer is 600.
EOQ = Root OF (2×6000×60/)20×10% = 600 Units