A company estimates that ordering costs are $2.00 per order, picking costs are $1.00 for each different item ordered, packing costs are $0.07 per item, and return costs are $40.00 per return.A customer orders $8,000 worth of goods with direct costs of $6,200.The customer places 70 orders, orders 24 unique items, 940 total items, and makes 7 returns.What is the customer profit?
A)$509.80
B)$1,290.20
C)$7,490.20
D)$1,800

Question

Quizplus · Accepted Answer

To calculate the profit, we first need to calculate the total cost.

Total ordering cost = 70 orders x $2.00 per order = $140.00
Total picking cost = 24 unique items x $1.00 per item = $24.00
Total packing cost = 940 total items x $0.07 per item = $65.80
Total return cost = 7 returns x $40 per return = $280.00
Total direct cost = $6,200.00
Total cost = $140.00 + $24.00 + $65.80 + $280.00 + $6,200.00 = $6,709.80

Now, we can calculate the profit:

Profit = Total revenue - Total cost
Total revenue = $8,000.00
Profit = $8,000.00 - $6,709.80 = $1,290.20

Therefore, the best choice is B.

A Company Estimates That Ordering Costs Are $2