A customer has been ordering 80,000 caps during the year. It is estimated that it costs 1as inventory holding cost per cap per month and that the…

CA Intermediate · Cost and Management Accounting · MTP · May 2024
A customer has been ordering 80,000 caps during the year. It is estimated that it costs 1as inventory holding cost per cap per month and that the set up cost per run of cap manufacture is 3,500 What is optimum run size of cap manufacture?
(A) A. 12 runs
(B) B. 10 runs
(C) C. 15 runs
(D) D. 7 runs

Suggested Answer and Working Notes:

Correct Answer: Option (A)

A. 12 runs

Topics: Unit & Batch Costing

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