A company estimates that ordering costs are $3.20 per order, picking costs are $2.15 per unique item ordered, packing costs are $0.04 per item, and return costs are $15.00 per return.A customer orders $8,440 worth of goods with direct costs of $5,200.The customer places 85 orders, orders 72 unique items, 450 total items, and makes 5 returns.What is the customer profit?
A)$519.60
B)$3,240
C)$2,720.20
D)$7,920.20

Question

Quizplus · Accepted Answer

To calculate the customer profit, we need to first calculate the total cost incurred by the company.
Ordering Costs = $3.20 * 85 = $272
Picking Costs = $2.15 * 72 = $154.80
Packing Costs = $0.04 * 450 = $18
Return Costs = $15 * 5 = $75
Total Costs = $272 + $154.80 + $18 + $75 = $519.80

The direct costs of the goods sold to the customer are $5,200, so the revenue earned is $8,440 - $5,200 = $3,240.

Customer Profit = Revenue - Total Costs = $3,240 - $519.80 = $2,720.20

Therefore, the best choice is C.

A Company Estimates That Ordering Costs Are $3