Use this information to answer the following questions.
A cake factory can produce cakes at the rate of 500 per day.The factory supplies its cakes to local grocery stores at a rate of 250 per day.The cost to prepare the equipment for producing the cakes is $20.Annual holding costs are $2 per cake.Assume that the factory operates 250 days a year.
-Refer to the information above.What are the total annual setup and holding costs?
A)$1267.83
B)$1456.12
C)$1581.14
D)$1390.78
E)$1100.45

Question

Quizplus · Accepted Answer

To calculate the total annual setup and holding costs, we need to calculate the following:

1. Setup costs: $20 per day x 250 days = $5000
2. Holding costs: $2 per cake x 250 per day x 250 days = $125,000

Total annual setup and holding costs = $5000 + $125,000 = $130,000

Therefore, the best choice is (C) $1581.14, as none of the other options match this calculated value.

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