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Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger
Edition 6ISBN: 978-1305103962Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger
Edition 6ISBN: 978-1305103962 Exercise 12
Safety Stock and the Reorder Point with Safety Stock
La Cucina Company sells kitchen supplies and housewares. Lava stone is used in production of molcajetes (mortars and pestles used in the making of guacamole) and is purchased from external suppliers. Each year, 8,000 pounds of lava stone is used; it is used evenly at the rate of 30 pounds per day. However, some days as many as 35 pounds are used. It takes La Cucina 5 days from the time of order to the time of arrival of the order.
Required:
1. Calculate the amount of safety stock.
2. Calculate the reorder point with safety stock.
La Cucina Company sells kitchen supplies and housewares. Lava stone is used in production of molcajetes (mortars and pestles used in the making of guacamole) and is purchased from external suppliers. Each year, 8,000 pounds of lava stone is used; it is used evenly at the rate of 30 pounds per day. However, some days as many as 35 pounds are used. It takes La Cucina 5 days from the time of order to the time of arrival of the order.
Required:
1. Calculate the amount of safety stock.
2. Calculate the reorder point with safety stock.
Explanation
Verified
Verified
Annual demand = 8,000 pounds
Average dai...
Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger
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