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Question - A Company wishes to determine the amount of safety stock that it should maintain for product Z to result in the lowest cost. The following information is available:
Stock out cost $80 per occurrence
Carrying cost of safety stock $2 per unit
Number of purchase orders 5 per year
The options available for A Company are as follows:
Units of safety stock
Probability of running out of safety stock
10
50%
30
30%
50
10%
55
5%
Required - What is the number of units of safety stock that will result in the lowest cost?
Selby Company sold equipment that had a book value of $13,500 for $15,000. Prepare the appropriate journal entry to record the disposition of the equipment
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Break Even Point
In the case description above, what are the fixed and what are the variable costs? Is John's financial goal realistic? Justify your judgment in light of data.
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