Aberwald Corporation expects to order 126,000 memory chips for inventory during the coming year and has calculated its economic order quantity as 3000 units. If the cost per order is $5, the total ordering cost incurred by Aberwald is:

Question

Quizplus · Accepted Answer

The total ordering cost is calculated as the number of orders multiplied by the cost per order. In this case, the number of orders is 126,000 units divided by the economic order quantity of 3000 units, which is 42. The total ordering cost is therefore 42 orders multiplied by $5 per order, which is $210.

Aberwald Corporation Expects to Order 126,000 Memory Chips for Inventory