A company manufactures a product with a monthly demand of 2,000 units. Each unit costs 50to produce, and the setup cost per batch is 3,000. The…
CA Intermediate · Cost and Management Accounting · MTP · September 2025
A company manufactures a product with a monthly demand of 2,000 units. Each unit costs 50to produce, and the setup cost per batch is 3,000. The company incurs a storage cost of 2 per unit per month and applies an annual interest rate of 18% on capital tied up in inventory. The finished goods are stored for an average of 2 months before being sold. Considering both storage cost and opportunity cost based on the average inventory holding period, what is the Economic Batch Quantity (EBQ)?
Suggested Answer and Working Notes:
Correct Answer: Option (A)
2,376 units
Topics: Unit & Batch Costing
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