What is the goal of the eoq model

Assignment Help Managerial Accounting
Reference no: EM13171211

Question #1

List and describe the four standards in the IMA's Statement of Ethical Practice.

Question #2

Consider the following information, prepared based on a capacity of 60,000 units:

Category

Cost per Unit

Variable manufacturing costs

$12.00

Fixed manufacturing costs

$3.50

Variable marketing costs

$4.00

Fixed marketing costs

$2.50

Capacity cannot be added and the firm currently sells the product for $25 per unit.

Consider each of these scenarios independent of each other.

a) The company is currently producing 60,000 units per month. A potential customer has contacted the firm and offered to purchase 10,000 units this month only. The customer is willing to pay $23 per unit. Since the potential customer approached the firm, there will be no variable marketing costs incurred. Should the company accept the special order? Why or why not? Be specific.

b) The company is currently producing 45,000 units per month. A potential customer has contacted the firm and offered to purchase 10,000 units this month only. Since the potential customer approached the firm, there will be no variable marketing costs incurred. What is the minimum amount that the firm should be willing to accept for this order?

Question #3

List and describe three ways a firm can determine long-run prices. As part of your answers, be sure to describe when each method would be most appropriate and the strengths and weaknesses of each method.

Question #4

Consider the following information:

 

Q1

Q2

Q3

Beginning inventory (units)

0

J

300

Actual units produced

4,700

5,200

5,100

Budgeted units to be produced

5,000

5,000

Q

Units sold

A

5,100

R

Variable manufacturing costs per unit produced

$150

$150

$150

Variable marketing costs per unit sold

$50

$50

$50

Fixed manufacturing costs

$800,000

$800,000

$800,000

Fixed marketing costs

$200,000

$200,000

$200,000

Selling price per unit

$500

$500

$500

Variable costing operating income

B

$530,000

S

Absorption costing operating income

C

K

$544,000

Variable costing beginning inventory

D

$30,000

T

Absorption costing beginning inventory

E

L

U

Variable costing ending inventory

F

M

$30,000

Absorption costing ending inventory

G

N

$62,000

PVV

H

O

V

Allocated fixed manufacturing costs

I

P

$816,000

There are no price, efficiency, or spending variances, and any production-volume variance is directly written off to cost of goods in the quarter in which it occurs.

Complete the missing figures from the above Table.

Q1

Q2

Q3

A

J

Q

B

K

R

C

L

S

D

M

T

E

N

U

F

O

V

G

P

 

H

 

 

I

 

 

Question #5

a) What is the goal of the EOQ model?

b) Why does a firm hold "safety stock?"

c) What costs are a firm trying to balance when it decides on how much safety stock to hold?

Question #6

What is the justification for using backflush costing? Be specific!

Reference no: EM13171211

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