Refer to Carmel Company. The company has decided to begin ordering 60 units at a time. What is the average annual ordering cost of this new policy?
A) $60
B) $135
C) $150
D) $185

Question

Quizplus · Accepted Answer

To calculate the annual ordering cost, we need to divide the total number of units ordered in a year (800) by the new order size (60) to get the number of orders placed in a year (13.33). Then, we multiply this number by the ordering cost per order ($10) to get the average annual ordering cost:

13.33 x $10 = $133.33

Therefore, the best choice is B ($135) as it is the closest option to the calculated $133.33.