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Explain this question why they are not using the formula purchase Cost + ordering cost + carrying cost??

Answers (6)

Best Answer

The formula given by you is relevant for calculating total costs in eoq calculation scenario based questions. This question is simply asking what is the cost of purchase. In your formula there are 3 elements cost of purchase+ ordering cost + carrying cost.. This question is based on calculation of what is cost of purchase

Here stores overhead is added to find material cost issued to production This means that all the purchased quantity is stored and issued to production. Am I right? This is the possible scenario that can be asked or else there is any other possibility to change the question and ask ??