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Question: Globe Inc. is a distributor of DVDs. DVD Mart is a local retail outlet which sells blank and reco…

by | Nov 30, 2023 | Posted Questions



Globe Inc. is a distributor of DVDs. DVD Mart is a local retail
outlet which sells blank and recorded DVDs. DVD Mart purchases DVDs
from Globe at

$30

per​ DVD; DVDs are shipped in packages of

70.

Globe pays all incoming​ freight, and DVD Mart does not inspect
the DVDs due to​ Globe’s reputation for high quality. Annual demand
is

318,000

DVDs at a rate of

6,700

DVDs per week. DVD Mart earns

14​%

on its cash investments. The

purchaseminus−order

lead time is one week. The following cost data are​
available:

Relevant ordering costs per purchase order $116.5

Carrying costs per package per​ year:

      Relevant​ insurance, materials​ handling,

     ​ breakage, etc., per year $5.5

What are the relevant total​ costs?

A.

$96,914

B.

$21,575

C.

$15,115

D.

$ 17,805

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