Purchase Solution

Classification of inventory costs

Not what you're looking for?

Ask Custom Question

A manufacturer of wooden furniture carries in its warehouse only one type of inventory: lumber. Following are various costs that may or may not be associated with the inventory:

(see chart in attached file)

a. What is the inventory carry cost rate (I) for the total inventory stored?
b. What is the average cost of processing a purchase order (S)? Assume that 3,000 purchase orders per year are processed.
c. What is the EOQ for 1 by 4 inch boards? Assume that 30,000 of these boards are used annually.
d. What is the annual cost of capital invested in 1 by 4 inch boards? (Ignore safety stock)

Attachments
Purchase this Solution
Solution Summary

This posting contains classification of various inventory related costs under the heads of Ordering and Carrying cost.

Purchase this Solution
Free BrainMass Quizzes
Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

View More Free Quizzes
Related BrainMass Solutions

  • Inventory Classification Explanation

    Also, introducing classification of inventory will help drugstore chain with 24,000 items develop a scientific method of controlling inventories. This reduces clerical costs and helps maintain stock at optimum level.

  • Inventory Management for Houts Plastics

    As per ABC, "A company that uses annual costs of goods sold (COGS) as its basis for the ABC classification method stocks less of the "A" class items (identified as having higher annual COGS) and stocks more of the "B" and C" class items (identified as

  • ABC Inventory Classification

    598202 ABC Inventory Classification Provide an example of ABC classification in a business you are familiar with. What would be the A inventory items versus B and C? What ordering policies would you use for each of these?

  • Financial Statement Classification of Accounts

    Purchases in 2005 were: (show your work please) Cost of goods sold = beginning inventory + Purchases - ending inventory 2005: Cost of goods sold = $2,500,000 Beginning inventory of 2005 = ending inventory of 2004 = $200,000 Ending inventory of

  • Cost Classification, Inventory Computation Report

    439948 Cost Classification, Inventory Computation Report 14-3A - Assume that you must make a presentation to the marketing explaining the difference between product and period cost.

  • Fairwings Avionics, Mountain High, Ryser, Mannerman Fabrica

    207472 Exercise 2-2 Classification of Costs as Period or Product Costs [LO2] Suppose that you have been given a summer job at Fairwings Avionics, a company that manufactures sophisticated radar sets for commercial aircraft.

  • Manufacturing cost flow for one year period

    Also designate the classification of cash flows using the letters OA for operating activities, IA for investing activities, and FA for financial activities. B.

  • Problem 14-3A, 14-8A, Cost classification, Inventory

    419350 Problem 14-3A, Cost classification and explanation, Problem 14-8A, Manufacturing and income statements, inventory analysis Problem 14-3A Cost classification and explanation Assume that you must make a presentation to the marketing staff explaining

  • Inventory Management for Wheeled Coach

    Cycle counting provides a much more effective auditing procedure than periodic (annual) counts of inventory. Only by driving down purchase costs and maintaining tight control of inventory can Wheeled Coach control its total costs.

View More Related Solutions