A Company Estimates That Ordering Costs Are $2

question 109

Multiple Choice

A company estimates that ordering costs are $2.00 per order, picking costs are $1.00 for each different item ordered, packing costs are $0.07 per item, and return costs are $40.00 per return.A customer orders $8,000 worth of goods with direct costs of $6,200.The customer places 70 orders, orders 24 unique items, 940 total items, and makes 7 returns.What is the customer profit?

• A)$509.80
• B)$1,290.20
• C)$7,490.20
• D)$1,800

---

Definitions:

Earnings Before Taxes

The income a company generates before taking into account the income tax expense.

Sales Price

The amount a buyer pays to purchase a product or service.

Net Present Value

The current value of an investment's projected earnings, discounted at an appropriate interest rate, minus the initial capital cost.

Required Rate

The lowest return an investor is willing to accept on an investment to deem it as profitable.