A company uses the Economic Order Quantity (EOQ) model to establish reorder quantities. The following information relates to the forthcoming period:
Order costs = $25 per order Holding costs = 10% of purchase price Annual demand = 20,000 units Purchase price = $40 per unit EOQ = 500 units No safety inventory is held.
What are the total annual costs of inventory (i.e. the total purchase cost plus total order cost plus total holding cost)?
$
Purchase costs (20,000 units x $40) 800,000
Order costs (20,000/500 orders x $25/order) 1,000
Holding costs (500/2 average units x$4/unit) 1,000
Total costs 802,000
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Which of the following statements about management accounting information is/are true?
(i) They must be stated in purely monetary terms.
(ii) Limited companies must, by law, prepare management accounts.
(iii) They serve as a future planning tool and are not used as an historical record.
Which of the following statements is/are correct?
(i) A management control system is a term used to describe the hardware and software used to drive a database system which produces information outputs that are easily assimilated by management.
(ii) An objective is a course of action that an organisation might pursue in order to achieve its strategy.
(iii) Information is data that has been processed into a form meaningful to the recipient.
Good information should have certain qualities. Which of the following are qualities of good information?(i) Complete(ii) Extensive(iii) Relevant(iv) Accurate
Monthly variance reports are an example of which one of the following types of management information?
Which of the following statements is/are correct?
(i) Information for decision-making should incorporate uncertainty in some way
(ii) The data used to prepare financial accounts and management accounts are the
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