Use the information below to answer the following question(s).Office Supply House purchases 4,160 reams of paper per year, ordered in lots of 80 reams per week at $150 per ream.The vendor covers all shipping costs.Office Supply House is not required to inspect the shipment upon entry.Office Supply House earns 20% on its cash investments.The purchase order lead time is two weeks.The following cost data are available:

-What are the total relevant inventory costs at the economic order quantity?
A)$3,913.65
B)$3,948.50
C)$4,975.86
D)$6,238.62
E)$4,862.84

Question

Use the information below to answer the following question(s).Office Supply House purchases 4,160 reams of paper per year, ordered in lots of 80 reams per week at $150 per ream.The vendor covers all shipping costs.Office Supply House is not required to inspect the shipment upon entry.Office Supply House earns 20% on its cash investments.The purchase order lead time is two weeks.The following cost data are available:
 
-What are the total relevant inventory costs at the economic order quantity?
A)$3,913.65 
B)$3,948.50 
C)$4,975.86 
D)$6,238.62 
E)$4,862.84

Quizplus · Accepted Answer

The total relevant inventory costs at the economic order quantity (EOQ) are calculated by adding the ordering costs and holding costs at the EOQ level. The given correct choice is $3,913.65.

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