Costs and Revenues Question

Mollypod88

Hi All,

My friend needs help answering the attached question and as I haven't done Costs and Revenues yet I have no idea!

Thank you!

Attachment not found.

Jo Clark

Hello Molly

Not sure exactely what they need help with as the answer is given.

Do they need an explanation of what EOQ is? Are they remembering to calculate the square root once they have completed the calculation.

Have you told your friend about this forum? Perhaps they could sign up and join in with other forum discussions?


JC

MarkT

The formula is correct.

The Square root of: 2 x the purchase cost (£3.60) x the annual stock amount (112,500) divided by the yearly holding cost per unit (£1.80) = 670.82

wbauk2002

Just to further on what mark said in case you get confused, he put x purchase cost, this is the cost of makin an order such as delivery, admin etc and not the cost of the items, don't mean too patronise I just read it like that

Mollypod88

Hi All,

Thanks for your help. Will show my friend tomorrow morning. She has her own account now so will point her in the right direction if she has any further questions :001_smile: