Annual demand is 10,000 units, ordering cost is Rs. 50 per order, and annual holding cost is Rs. 2 per unit. What is the economic order quantity, approximately?
Correct answer: C. 707 units
- A. 500 units
- B. 632 units
- C. 707 units
- D. 1,000 units
Explanation
Economic order quantity is calculated as the square root of 2DS divided by H. Here it is the square root of 2 × 10,000 × 50 divided by 2, which is approximately 707 units.
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Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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