LAMA Creations Creates Sweaters Using the Wool of the Llama

question 17

Multiple Choice

LAMA Creations creates sweaters using the wool of the Llama. The wool used in the manufacturing process is ordered by the bundle. LAMA requires 1,200 bundles of Llama wool per year and places orders of 100 bundles at a time. The cost of ordering is $80.00 per order and the carrying cost per bundle is $3.50. What are LAMA Creations' total costs of managing inventory?

• A) $960.00
• B) $1,135.00
• C) $1,225.00
• D) $175.00

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Definitions:

Automatic Payroll Deductions

A system where amounts are automatically subtracted from an employee's paycheck by the employer for taxes, benefits, and other financial obligations.

Dictator Game

A behavioral economics experiment that tests how fairly individuals split money or resources between themselves and others without enforcement mechanisms.

Ultimatum Game

A game in economic experiments where one player proposes a division of a sum of money and the other player can accept or reject the proposal, testing concepts of fairness and decision-making.