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Calculate the total ordering costs and carrying costs

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Reference no: EM132738412

Questions -

Q1 - Wonder Wholesalers credit terms to Shina Stores are 30 days but Wonder Wholesalers is prepared to allow 2.5% discount if Shina Stores pays the account within 10 days.

Required - Calculate the cost as a percentage to Shina Stores of forgoing the discount.

Below is the information from Shina Stores as at 31 May 2020

ZAR

Cash flows from operating activities 7200000

Cash flows from operating activities (1260000)

Additions to plant and Equip (1260000)

Cash flows from finance activities 600000

Proceeds from share issued 600000

1. Calculate the cash balance as at 31 May if the cash balance on 31 May 2019 was R200000 favourable.

2. Analyse the cash flow of the company.

Q2. The monthly sales of a product sold by Molda Limited are 150000 units. the purchase prices is R16 per unit. The carrying cost of inventory amounts to 25% of the purhase price. The ordering cost is R12 per order.

Calculate Annual economic order quantity (EOQ).

Calculate the number of orders that to be placed annually based on the EOQ.

Calculate the total ordering costs and carrying costs.

Reference no: EM132738412

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