- This topic has 1 reply, 2 voices, and was last updated 2 years ago by .
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
OpenTuition recommends the new interactive BPP books for June 2024 exams, Get your discount code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › TOTAL COST Inventory management
Sir as for total cost it is
Ordering cost + holding cost on the quantity ordered each time
For EOQ Total cost
Total cost formula will be the same but quantity will be replaced with EOQ quantity.
For above cases purchase price will be ignored.
My question is when discount is offered.
how will be total cost calculated.obviously we will first look if our EOQ quantity is lower than discounted qty then need to calculate total cost.
WILL purchase price come into effect for both EOQ and discounted qty for total cost calculation?
If there are quantity discounts then the purchase price is relevant when deciding whether or not the order quantity should be different from the EOQ.
I work through examples illustrating how we deal with this in my free lectures on the management of inventory.
The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.