A company uses an item of inventory as follows.
Purchase price $25 per unit
Annual demand 1,800 units
Ordering cost $32
Annual holding cost $4.50 per unit
EOQ 160 units
What is the minimum total cost assuming a discount of 2% applies to the purchase price and to holding costs on orders of 300 and over?
The company could order the EOQ amount of 160 or it could order 300 units and take a discount of 2%. We need to work out which is the cheapest option.
Purchases (no discount) 1,800 x $25$ 45,000
Holding costs (W1) 360
Ordering costs (W2) 360
Total annual costs 45,720
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Which of the following statements about management accounting information is/are true?
(i) They must be stated in purely monetary terms.
(ii) Limited companies must, by law, prepare management accounts.
(iii) They serve as a future planning tool and are not used as an historical record.
Which of the following statements is/are correct?
(i) A management control system is a term used to describe the hardware and software used to drive a database system which produces information outputs that are easily assimilated by management.
(ii) An objective is a course of action that an organisation might pursue in order to achieve its strategy.
(iii) Information is data that has been processed into a form meaningful to the recipient.
Good information should have certain qualities. Which of the following are qualities of good information?(i) Complete(ii) Extensive(iii) Relevant(iv) Accurate
Monthly variance reports are an example of which one of the following types of management information?
Which of the following statements is/are correct?
(i) Information for decision-making should incorporate uncertainty in some way
(ii) The data used to prepare financial accounts and management accounts are the
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