Cost accounts

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 September 2016 After inviting tenders, two quotations are received as follows : supplier A -2.20 per unit and supplier B - 2.10 per unit plus 2000 fixed charges irrespective of units ordered. calculate order quantity for which total purchase price will be the same. considering all factors regarding production requirements and availability of finance , the purchase officer wants to place an order for 15000 units which supplier should he select?
Please help I can't seem to solve this !

Amol S Joglekar

Amol S Joglekar (Expert)
Follow

26 September 2016 At times, DONKEY method gives easy but sure results....
Find out the cost for each supplier, assuming the order for 15000 units is given
Supplier A ----- 15000 units X 2.20 per unit = 33,000
Supplier B ----- (15000 units X 2.10 per unit) + 2000 =33,500
Now you tell which one should be selected?

Querist : Anonymous

Querist : Anonymous (Querist)

26 September 2016 Supplier A
But the ques. Is asking for the purchase price to be the same.. ?! Then I guess we'll have to find out the max quantity which can be purchased at the same cost.

Amol S Joglekar

Amol S Joglekar (Expert)
Follow

26 September 2016 Oh i see......I thought after getting the answer you would be able to find it out by yourself....anyway......
How about the quantity of 20,000?
Now please try to find out how I solved it?

Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2016 Oh yes I'm sorry I didn't get it at first.
Thanks a ton!

Amol S Joglekar

Amol S Joglekar (Expert)
Follow

27 September 2016 You are most welcome.
If you dont mind can you please give me the procedure how to find out the answer 20,000?

Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2016 Let the no. of units be x.
Then , 2.20x = 2000+ 2.10x
2.20x - 2.10x = 2000
0.1x. = 2000
x = 20000

Amol S Joglekar

Amol S Joglekar (Expert)
Follow

27 September 2016 absolutely fine.... no problem....
If you want to solve it Arithmetically.....solve it like this
the cost difference is 2.20 - 2.10 = 0.10
the fixed element is 2000
so the answer = 2000 divided by 0.10 = 20,000

Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2016 Ya bt fixed cost bhi thi to I thought exam mei wo accept na kre ans. To tbhi Maine arithmetically solve kra.

Amol S Joglekar

Amol S Joglekar (Expert)
Follow

27 September 2016 both ways are right.... whichever is comfortable...that should be followed...

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now