An Item with a Holding Cost of $400 Per Year

question 102

Multiple Choice

An item with a holding cost of $400 per year can be shipped by air in 1 day,costing $250,or by ground in 5 days,costing $150.Assuming the holding costs of $400 per year are based on an operational year of 365 days,which is cheaper and by how much?

• A)Ground is cheaper by $60.00
• B)Ground is cheaper by $70.89
• C)Ground is cheaper by $95.62
• D)Ground and air have the same total cost
• E)Air is cheaper by $100.

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Definitions:

Credit Card

A payment card issued by a financial company giving the holder an option to borrow funds, typically at point of sale.

Factor

A finance company or bank that buys receivables from businesses and then collects the payments directly from the customers.

Receivables

Receivables are amounts of money owed to a company by its customers or other parties for goods or services provided on credit.

Service Charge

A Service Charge is a fee collected to pay for services related to a primary product or service, such as handling fees, maintenance, or repair services.