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  • Methods of Material Issue

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    Rupali Sharma
    5 views15 pages
    The document discusses different inventory costing methods like LIFO, FIFO, simple average and weighted average. It then provides examples of calculating economic order quantity and number of orders required per year for two companies based on their annual demand, ordering cost, carrying cost and unit price. The optimal order quantity and number of orders are calculated to minimize total inventory costs.

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    The document discusses different inventory costing methods like LIFO, FIFO, simple average and weighted average. It then provides examples of calculating economic order quantity and number of orders required per year for two companies based on their annual demand, ordering cost, carrying cost and unit price. The optimal order quantity and number of orders are calculated to minimize total inventory costs.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    5 views15 pages

    Methods of Material Issue

    Uploaded by

    Rupali Sharma
    The document discusses different inventory costing methods like LIFO, FIFO, simple average and weighted average. It then provides examples of calculating economic order quantity and number of orders required per year for two companies based on their annual demand, ordering cost, carrying cost and unit price. The optimal order quantity and number of orders are calculated to minimize total inventory costs.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 15

    Material Valuation

    LIFO
    FIFO
    Simple Average
    Weighted Average
    Problem
    FIFO Method
    LIFO Method
    • https://
    www.linkedin.com/learning/running-a-profita
    ble-business-calculating-breakeven/importanc
    e-of-breakeven-analysis-14748318?autoSkip=t
    rue&resume=false&u=104956452

    • https://www.linkedin.com/learning/running-
    a-profitable-business-calculating-breakeven/
    importance-of-breakeven-analysis-14748318?
    autoSkip=true&resume=false&u=104956452
    • The John Equipment Company estimates its
    carrying cost at 15% and its ordering cost at $9
    per order. The estimated annual requirement
    is 48,000 units at a price of $4 per unit.
    • Required:
    • What is the most economical number of units
    to order?
    • How many orders should be placed in a year?
    • How often should an order be placed?
    • Answer:
    • A .1200
    • B. 40
    • C. 9
    • A manufacturing company places a semi-
    annual order of 24,000 units at a price of $20
    per unit. Its carrying cost is 15% and the order
    cost is $12 per order.
    • Required:
    • What is the most economical order quantity?
    • How many orders need to be placed?
    • Answer:
    • A. 620
    • B. 77

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