What is the optimal safety stock level

Assignment Help Managerial Accounting
Reference no: EM132577245

Each stock out of a product sold by Arroyo Co. costs P1,750 per occurrence. The company's carrying cost per unit of inventory is P5 per year, and the company orders 1,500 units of product 20 times a year at a cost of p100 per order. The probability of a stock out at various levels of safety stock are;

Unit of Safety Stock                   Probability of Stock Out

0                                                            0.50

100                                                        0.30

200                                                        0.14

300                                                         0.05

400                                                          0.01

Question 1: What is the optimal safety stock level?

Reference no: EM132577245

Questions Cloud

Examine the merits and limitations of the observation method : Examine the merits and limitations of the observation method in collecting material illustrate your answer with suitable examples.
Analyze health records for data components : 1) Analyze health records for data components and use in professionally managing patient health
Rlp and rlr frameworks instead of picking one : Why is it better for a company to use both RLP and RLR frameworks instead of picking one
Americans concern for environment : Do you believe Americans' concern for the environment is a stronger value than their materialism?
What is the optimal safety stock level : What is the optimal safety stock level? Each stock out of a product sold by Arroyo Co. costs P1,750 per occurrence. The company's carrying cost per unit
Negotiate the purchase of an organization : What negotiation strategy would be used if an individual is part of a team that has been asked to negotiate the purchase of an organization?
Implement learning and development needs : It is necessary to systematically identify and implement learning and development needs in line with organisational requirements.
What is the amount of the costs transferred to finished good : What is the cost of beginning work in process completed during May? What is the amount of the costs transferred to finished goods?
List the indicators of risk outlined in the case study : a) Is Fili at significant risk of harm? Explain your response b) List the indicators of risk outlined in the case study

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Manage budgets and financial plans

Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.

  Prepare a retained earnings statement

Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.

  Prepare a master budget for the three-month period

Prepare a master budget for the three-month period.

  Construct the companys direct labor budget

Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

  Evaluate the predetermined overhead rate

Evaluate the Predetermined Overhead Rate

  Determine the company''s bid

Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Prepare Company financial statements

Prepare Company financial statements

  Prepare an analysis of terracycles

This individual assignment is based on the TerraCycle Inc.

  Discuss the ethical issues

Discuss the ethical issues

  Political resources in emerging markets

Calculate the GDP in Income Approach  and Expenditure Approach

  Management accounting - ehsan electronics company

A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd