A restaurant consumes wine at the rate of 50 bottles per day. Wine is purchased by the case and there are 13 bottles per case. The current ordering policy generates a total annual holding cost of $5020 and a total annual ordering cost of $3000. Next week the restaurant will switch from the current policy of purchasing 10 cases of wine in each order to purchasing wine based on the optimal FOQ. Which of the following will be a result of this switch in policy? a. Less than 10 cases of wine will be bought at a single time.
b. Total annual holding costs will increase.
c. Total annual inventory costs will increase.
d. Total annual ordering costs will decrease.
e. Both b) and d) will be results of this switch in policy.

Doogan corporation makes a product with the following standard costs: standard quantity or hours standard price or rate direct materials 2.0 grams $ 7.00 per gram direct labor 1.6 hours $ 12.00 per hour variable overhead 1.6 hours $ 6.00 per hour the company produced 5,000 units in january using 10,340 grams of direct material and 2,320 direct labor-hours. during the month, the company purchased 10,910 grams of the direct material at $7.30 per gram. the actual direct labor rate was $12.85 per hour and the actual variable overhead rate was $5.80 per hour. the company applies variable overhead on the basis of direct labor-hours. the direct materials purchases variance is computed when the materials are purchased. the materials quantity variance for january is: