The Flowering Vine buys hanging plants for $2 each and resells them for $8.95 ea
ID: 2675177 • Letter: T
Question
The Flowering Vine buys hanging plants for $2 each and resells them for $8.95 each. The firm sells 3,500 plants per year. Generally, the firm orders 400 plants at a time and has a fixed cost per order of $28. The carrying cost per unit is $1.16. To avoid newer plants mixing with older plants, the inventory is totally sold out before it is restocked. The total annual carrying cost is ____ and the total annual restocking cost is _____.A-$232; $269
B-$232; $245
C-$232; $256
D-$211; $245
E-$211; $269
Explanation / Answer
The Flowering Vine buys hanging plants for $2 each and resells them for $8.95 each. The firm sells 3,500 plants per year. Generally, the firm orders 400 plants at a time and has a fixed cost per order of $28. The carrying cost per unit is $1.16. To avoid newer plants mixing with older plants, the inventory is totally sold out before it is restocked. The total annual carrying cost is ____ and the total annual restocking cost is _____.
A-$232; $269
B-$232; $245
C-$232; $256
D-$211; $245
E-$211; $269
Total annual carrying cost = [(400 + 0)/2] $1.16 = $232
Total restocking cost = (3,500/400) $28 = $245
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