Very Technical is a firm that sells computing equipment. It costs Very Technical $100 for each order of computer monitors and the variable cost of placing an order is $4 per monitor. Very Technical pays an annual holding cost of $10 per monitor. If Very Technical sells 6,000 computer monitors a year and they order 500 monitors, what is the total annual cost of the monitors?
A)$32,800
B)$21,500
C)$35,700
D)$27,700

Question

Quizplus · Accepted Answer

The total annual cost includes the ordering cost, holding cost, and the cost of the monitors. Ordering cost is (6000/500) * $100 = $1,200. Holding cost is (500/2) * $10 = $2,500. The variable cost is 6000 * $4 = $24,000. Total cost = $1,200 + $2,500 + $24,000 = $27,700.

Very Technical Is a Firm That Sells Computing Equipment