Figure 24-4 Buckner Manufacturing Purchases Components Produced by Cochran Company in the in the Manufacture

question 40

Multiple Choice

Figure 24-4
Buckner Manufacturing purchases components produced by Cochran Company in the manufacture of their main product. For the next year, Buckner expects to use a total of 30,000 parts. Buckner typically orders 500 units at a time. The cost of placing an order is £40, and the average annual cost of carrying one unit of inventory is £2.
-Refer to Figure 24-4. Buckner's total ordering cost is

• A)£120.
• B)£2,000.
• C)£2,400.
• D)£500.

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Definitions:

Secondarily Liable

Responsibility or liability that kicks in when the primarily responsible party fails to fulfill their obligations.

Accommodation Party

A person who signs a negotiable instrument for the purpose of lending their reputation to someone else on the instrument, without direct benefit.

Negotiable Instrument

A written document that promises or orders the payment of a fixed amount of money, with the capability of being transferred to another party.

Presentment

The act of making a demand for the drawee to pay.