Manufacturing Company originally estimated its annual demand for item XYZ as 8000 units per year at a unit cost of $10. The order cost is $30 and the holding cost per unit is $3 annually. that annual demand is only 6000 units and holding cost per unit per year are closer to $4. The only good news is that of $30 each. Gursoy now wants to know the significance of these mistakes on last year's decisions. has discovered at the end of the year figured orders cost $25 to place instead a) What was the combined effect of these errors on the economic order quantity for item XYZ? b) What was the individual effect of each error on item XYZ economic order quantity? c) What was the combined effect of these errors on the minimum total variable cost (fixed order cost and holding cost) of item XYZ for last year? d) What was the individual effects of each error in demand on the minimum total variable cost for last vear?

Manufacturing Company originally estimated its annual demand for item XYZ as 8000 units per year at a unit cost of $10. The order cost is $30 and the holding cost per unit is $3 annually. that annual demand is only 6000 units and holding cost per unit per year are closer to $4. The only good news is that of $30 each. Gursoy now wants to know the significance of these mistakes on last year's decisions. has discovered at the end of the year figured orders cost $25 to place instead a) What was the combined effect of these errors on the economic order quantity for item XYZ? b) What was the individual effect of each error on item XYZ economic order quantity? c) What was the combined effect of these errors on the minimum total variable cost (fixed order cost and holding cost) of item XYZ for last year? d) What was the individual effects of each error in demand on the minimum total variable cost for last vear?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter11: Strategic Cost Management

Section: Chapter Questions

Problem 29P: Nico Parts, Inc., produces electronic products with short life cycles (of less than two years)....

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