• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

New! Lectures for ACCA AAA September 2022 Exams are now available >>

New! BPP Books for ACCA September 2022 Exams are now available, get your discount code >>

accounting for materials

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › accounting for materials

  • This topic has 3 replies, 2 voices, and was last updated 4 months ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • March 1, 2022 at 2:51 pm #649559
    huzaifaminhas
    • Topics: 7
    • Replies: 2
    • ☆

    a retailer sells 50000 units of a product and demand is even throughout the year. the cost of placing each order is 5 dollars. the cost of holding one unit of product for one year is 2 dollars. the retailer uses the EOQ model to determine the size for this product.

    What is the total annual cost of ordering and holding this product?

    March 1, 2022 at 4:19 pm #649571
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49603
    • ☆☆☆☆☆

    There is no point in typing out a full question and expecting to be provided with a full answer. You must have an answer in the same book in which you found the question, so ask about whatever it is in the answer that you are not clear about and then I will explain.

    This is simple application of the EOQ formula that is provided in the exam.

    How to use it is explained in detail in my free lectures on inventory control.

    The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.

    March 1, 2022 at 11:42 pm #649594
    huzaifaminhas
    • Topics: 7
    • Replies: 2
    • ☆

    i dont understand the term even throughout the year, what does that mean? its asking for total annual cost of holding and ordering so should we not include purchase price multiplied by annual demand. Also i calculated the answer and it comes Co=600000/50000×5=60
    Ch= 50000/2×2=50000.
    please let me know if im calculating it the right way.

    March 2, 2022 at 7:14 am #649604
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49603
    • ☆☆☆☆☆

    The demand is 50,000 units a year. Spread evenly means that they are selling the same quantity each day and nothing some days selling a lot and some days selling very few – the economic order quantity formula assumes that this is the case.

    Your calculations are not correct because the economic order quantity is not 50,000. You need to use the formula to calculate how many are ordered each time.

    Have you actually watched my free lectures (because you cannot expect me to type them out again here 🙂 )?

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on Discounted Cash Flow Further Aspects, Lease versus Buy – ACCA Financial Management (FM)
  • ben920331 on Discounted Cash Flow Further Aspects, Lease versus Buy – ACCA Financial Management (FM)
  • John Moffat on The Statement of Financial Position and Income Statement (part d)
  • Viktoriia.Yanchuk on The Statement of Financial Position and Income Statement (part d)
  • John Moffat on The management of receivables – Simple settlement discount – ACCA Financial Management (FM)

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy