Quidi Vidi Co. has 325 motors in its inventory at the start of the week. It will use all of these in its weekly production runs and then resupply its inventory for the next week. The carrying cost per motor is $84.26. The fixed cost per order is $63. The variable cost per motor is $122. What are the total restocking costs for the year?
A) $3,276
B) $4,018
C) $5,667
D) $6,344
E) $9,620

Question

Quizplus · Accepted Answer

The total restocking costs for the year are the sum of the carrying costs, the fixed costs, and the variable costs. The carrying costs are $84.26 per motor, the fixed costs are $63 per order, and the variable costs are $122 per motor. Quidi Vidi Co. uses 325 motors per week, so the total number of motors used in a year is 325 * 52 = 16,900. The total carrying costs are $84.26 * 16,900 = $1,422,414. The total fixed costs are $63 * 52 = $3,276. The total variable costs are $122 * 16,900 = $2,066,800. Therefore, the total restocking costs for the year are $1,422,414 + $3,276 + $2,066,800 = $3,492,490.