LAMA Creations Creates Sweaters Using the Wool of the Llama

question 38

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. LAMA Creations' cost may change if the order quantity is increased from 100 bundles to 200 bundles at a time. What is the cost difference between the ordering costs with orders of 100 bundles as compared to orders of 200 bundles?

• A) $520.00
• B) $0.00
• C) $960.00
• D) $480.00

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Definitions:

Overjustification Effect

The phenomenon where providing excessive external rewards for an already internally rewarding activity can reduce a person's intrinsic motivation for the activity.

Payrise

An increase in the amount of money earned for work performed, typically expressed as a percentage of current salary.

Promotion

The advancement of an employee's rank or position in an organizational hierarchy.

Self-Discrepancy Theory

A theory that explores how differences between one's actual, ideal, and ought selves affect emotional states.