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Menen's photography Store sells 25,000 packets of photographic paper per year. The store is closed only for two weeks during the year due to annual holidays. The wholesale price is $3 per packet. The cost of processing each order to be placed with the wholesaler is $8 and carrying costs are $0.10 per packet per year.
Required:
Question 1. What is the EOQ for the store?
Question 2. Compute the total annual:
(i) Number of orders,
(ii) Total ordering costs,
(iii) Total carrying costs
(iv) Explain why traditional overhead allocation methods (i.e., plant-wide and departmental) distort product costs compared to ABC costing.
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