The setup cost to make a carpet is $20 per setup.The holding cost is $2.00 per yard per year,and the annual demand is 12,000 yards.The manufacturing facility operates 300 days,and 120 yards of the carpet are produced per day.Given this information,what is total annual set up cost?
A)$600
B)$500
C)$400
D)$300

Question

Quizplus · Accepted Answer

To find the total annual setup cost, we need to first determine how many setups are required in a year. We can do this by dividing the annual demand by the production per day:

12,000 yards / 120 yards per day = 100 setups per year

Now we can calculate the total setup cost:

$20 per setup x 100 setups = $2,000

Therefore, the answer is C) $400.

The Setup Cost to Make a Carpet Is $20 Per