Total Ordering Cost Formula
Total Ordering cost can be calculated formula. Total ordering cost for the year is calculated by multiplying the number of orders to be placed during the year with cost of placing one per order.
Total Ordering Cost =Number of Orders x Cost per order |
Total Ordering Cost Example
Number of orders per Year = 40
Cost of per order = 2000
Calculate total ordering cost?
Solution
Number of Orders during the Year x Cost per order
Total ordering cost = 40 x 2000
= 80,000 (Total ordering Cost)
Total ordering cost is important calculation for future budgeting & future planning. It also helps to plan future cash flows.
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