Cost and Management AccountingQuestion 5431 of 251
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15. A company is analysing its inventory management practices and has determined that the Economic Order Quantity (EOQ) is 400 units. The cost incurred for placing a single order is` 25, while the total demand for the year amounts to 8,000 units. Calculate the Carrying Cost per unit.

Options

A` 2.80 per unit
B` 1.85 per unit
C` 1.58 per unit
D` 2.50 per unit Answer Key MCQ No. Correct Option
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Correct Answer

✅ Option A — ` 2.80 per unit

All Options:

  • A` 2.80 per unit ✓
  • B` 1.85 per unit
  • C` 1.58 per unit
  • D` 2.50 per unit Answer Key MCQ No. Correct Option

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Detailed Solution & Explanation

The Economic Order Quantity (EOQ) is calculated using the formula:
EOQ=2×A×OC\text{EOQ} = \sqrt{\frac{2 \times A \times O}{C}}
Where:
- A\displaystyle A is the annual demand = 54,000 batteries
- O\displaystyle O is the ordering cost = ₹9,000 per order
- C\displaystyle C is the carrying cost per unit per annum = 37.5%×₹800=₹300\displaystyle 37.5\% \times ₹800 = ₹300
EOQ=2×54,000×9,000300=32,40,000=1,800 batteries\text{EOQ} = \sqrt{\frac{2 \times 54,000 \times 9,000}{300}} = \sqrt{32,40,000} = 1,800 \text{ batteries}
Hence, **Option A** is the correct answer.

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