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What is the eoq for the store

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Reference no: EM132692186

Melake's photography Store sells 24,000 packets of photographic paper per year. The store is closed only for two weeks during the year due to annual holidays. The wholesale purchase price of photographic paper is $4 per packet. The cost of processing each order to be placed with the wholesaler is $10 and carrying costs are $1.92 per packet per year.

Required: (write the formulas and show computations)

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.

Reference no: EM132692186

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