Instructions:

1. Students who practice PLAGIARISM will get the same sanctions as cheating.
2. If you use references from books, journals, or websites (websites in the form of
blogs / wordpress/ similar unofficial websites are not allowed), you must
include the reference source used. Important: Do paraphrasing and include
reference sources.
3. Answers are typed in Microsoft Excel, calculation using formula, Calibri 11, A4
format

Case (20 Points) – LO4, LO6

Vortex purchases one television model at a wholesale cost of $350 per unit and resells
it to end consumers. The annual demand for the company’s product is 600,000 units.
Ordering costs are $770 per order, and carrying costs are $40 per television, including
$20 in the opportunity cost of holding inventory. Required:
a. Compute the optimal order quantity using the EOQ model and explain the result! (5 points)
b. Compute and explain the result:
 The number of orders per year! (2.5 points)
 The annual relevant total cost of ordering and carrying inventory! (2.5 points)
c. Assume that when evaluating the manager, the company excludes the opportunity cost of
carrying inventory. If the manager makes the EOQ decision excluding the opportunity cost
of carrying inventory, the relevant carrying cost would be $20, not $40. How would this
affect the EOQ amount and the actual annual relevant cost of ordering and carrying
inventory? Please prove it with your calculation and explain the result! (5 points)
d. What is the cost impact on the company of excluding the opportunity cost of carrying
inventory when making EOQ decisions? Why do you think the company currently excludes
the opportunity costs of carrying inventory when evaluating the manager’s performance?
What could the company do to encourage the manager to make decisions more congruent
to reduce total inventory costs? (5 points)

Case (20 Points) – LO5, LO6

Nevada is a successful Indonesian private label, available exclusively at Matahari
Department stores and stand-alone Nevada stores. The brand has a clear identity and is
positioned towards a young, hip audience. As one of the apparel manufacturers in Indonesia,
they also need to be competitive in Indonesia and always try to align with the young generation.
Nevada changed their logo to match the young age in Indonesia.
“The requirement involved building on the equity of a live brand in an existing market to
further its influence and appeal with Indonesia's youth. The retail brand needed to be accessible
and aspirational without appearing too costly as well as needing a unisex appeal.” -
infestation.co.za
As a company, especially a manufacturer company, a logo becomes a very important part
of product design because the products must align with the logo color and design.
Nevada’s logo evolution:
Source: https://infestation.co.za/case-study/nevada-brand-development/

Nevada’s brand design with the new logo:

Source: https://infestation.co.za/case-study/nevada-brand-development/
Source: https://infestation.co.za/case-study/nevada-brand-development/

Suppose you get this information that related to Nevada, and as CFO, you must calculate the
overhead cost based on these workflows:
Case -
The cutting and labeling department can’t be operated without support from the
maintenance and cafeteria division. Also, the product changes will affect and support
all the related producing division and office support division.
Additional Information:
1. The total overhead for the maintenance department is $40,000 with the
support percentage: 50% for the cutting department, 20% for the labeling
department, 20% for a cafeteria, and the product design department.
2. The total overhead for the cafeteria department is $40,000 with the support
percentage: 40% for the cutting department, 30% for the labeling
department, 20% for maintenance, and the rest is for the Product design
department.
3. The total overhead for the cafeteria department is $20,000 with the support
percentage: 10% for the cutting department, 60% for the labeling
department, and the rest percentage, half for the marketing division and a
half for the office administration division.
4. The total overhead cost for the cutting department: $100,000 and $50,000 for
the labeling department.

Required:
a. Explain about the departments in Nevada based on the data above! (hint:
there must be one department that produces the product) (5 points)
b. Compute the overhead cost for each department! (hint: you must know the
allocation method first) (10 points)