The set-up cost of a machine is ₹120. For execution of a certain order, 9,000 components are required to be made in the machine. Cost of production of the component is ₹40 each and it requires 15% of the cost for storing
CS Executive · Cost and Management Accounting · PYQS · December 2014
The set-up cost of a machine is ₹120. For execution of a certain order, 9,000 components are required to be made in the machine. Cost of production of the component is ₹40 each and it requires 15% of the cost for storing it for a year. The economic batch quantity is —
Answer & Explanation:
Correct Answer: Option (D)
Correct answer: (D) 600 units.. Economic batch quantity = √[2×9,000×120/(40×15%)] = 600 units.
Topics: Material Costing
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