Crystal Clear Company Purchases 50,000 Gallons of Distilled Water Each

Crystal Clear Company purchases 50,000 gallons of distilled water each year. Ordering costs are $100 per order, and the carrying cost, as a percentage of inventory value, is 80 percent. The purchase price to CCC is $0.50 per gallon. Management currently orders the EOQ each time an order is placed. No safety stock is carried. The supplier is now offering a quantity discount of $0.03 per gallon if CCC orders 10,000 gallons at a time. Should CCC take the discount?

A) From a cost standpoint, CCC is indifferent.
B) No, the cost exceeds the benefit by $500.
C) No, the cost exceeds the benefit by $1,000.
D) Yes, the benefit exceeds the cost by $500.
E) Yes, the benefit exceeds the cost by $1,120.