The purchase price of an inventory item is $42 per unit. In each three-month per-新东方在线职业题库

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The purchase price of an inventory item is $42 per unit. In each three-month period the usage of the item is 2,000 units. The annual holding costs associated with one unit is 5% of its purchase price. The EOQ is 185 units.

What is the cost of placing an order (to 2 decimal places)?

$ O

Chapter6Accountingformaterials

Let Co = ordering cost

185 = V{[ 2 x Co x (4 x 2,000)] / [0.05 x 42】}

185=V(16,000xCO/2.1)

Co = 1852 x 2.1 / 16,000 = $4.49

Note that the period for demand must be the same as that given for holding cost. As holding cost is given as an annual figure quarterly demand must be converted to annual demand by multiplying by 4.

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What does an adverse variable overhead efficiency variance indicate and what might be the cause?

Explain briefly the possible causes of

(i) A favourable material usage variance

(ii) A favourable labour rate variance

(iii) An adverse sales volume contribution variance.

What is the relationship between the labour efficiency variance and the variable overhead efficiency variance? Why might the monetary value be different?

Explain the meaning and relevance of interdependence of variances when reporting to managers.

A balanced scorecard measures performance 什om four perspectives: customer satisfaction, growth, financial success and process efficiency. Briefly explain these processes.

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