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A manufacturing company uses 28,000 components at an even rate during the year. Each order placed with the supplier of the components is for 1,500 components, which is the economic order quantity. The company holds a buffer inventory of 700 components. The annual cost of holding one component in inventory is $B.

What is the total annual cost of holding inventory of the component?

$ O

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Chapter6Accountingformaterials

{[Buffer Inventory + (EOQ -r2)] x Annual holding cost per component} =f700 units + (1500 units + 2)] x $3.00 = $4,350

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Explain what is meant by standard costing

Explain what is meant by a standard cost

Describe four types of standard.

Explain what is meant by a standard hour.

Give five possible sources of information from which a standard materials price may be estimated.

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