Eoq model with quantity discounts, Managerial Accounting

EOQ Model with quantity discounts

Circumstances frequently occur where firms are able to obtain quantity discounts for large purchase orders. Buying in bulkiness has some merits and demerits.

Advantages:

(i) A saving in purchase rule decreases in unit cost, which consists of the total amount of discount for the period.

(ii) A reduction in the total ordering costs because fewer orders are placed to take advantages of the discounts.

Disadvantages:

Increased holding cost arising from higher stock levels when large quantities are purchased. Like:

•    Stock out cost
•    Insurance
•    Deterioration
•    Security etc.

Posted Date: 12/6/2012 6:09:31 AM | Location : United States







Related Discussions:- Eoq model with quantity discounts, Assignment Help, Ask Question on Eoq model with quantity discounts, Get Answer, Expert's Help, Eoq model with quantity discounts Discussions

Write discussion on Eoq model with quantity discounts
Your posts are moderated
Related Questions
M/s Sunrise Industries estimates its net cash requirement at Rs. 20 million for the subsequent year. Opportunity cost fund is 15 percent per annum of the Companies. The company wil

Assumptions Underlying the CVP Analysis CVP analysis as discussed above is based on certain assumptions . if these assumptions are not recognized then serious error may result

Explain Support activitiesand production process activity Support activities are for example schedule production set up machine purchase materials inspect item customer orde

Strategic Positioning The company must identify its strategic choices. This can be done from the firm’s objectives, which emanates from the firms mission. Strategies have to be

When the customers of the company are spread over broad geographical areas then in place of a particular collection centre the company opens collection centres at the regional stag

Explain Short term budgets Short term budgets: these budgets are generally for one or two years and are in the form of monetary terms. The consumer's good industries like su

The Rohr Company’s old equipment for making subassemblies is worn out. The company is considering two courses of action: (a) Completely replacing the old equipment with new equipme

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4 What is the Meaning Cos


) Allgood Inc. has fixed costs of $480,000. It has a unit selling price of $6, unit variable cost of $4.50, and a target net income of $1,500,000. HOW TO COMPUTE