Suppose the Campus Bookstore Purchases 50,000 Boxes of Writing Tablets

question 19

Multiple Choice

Suppose the Campus Bookstore purchases 50,000 boxes of writing tablets every year. Ordering costs are $100 per order and carrying costs are
$0) 40 per box. Moreover, management has determined that the EOQ is 5,000 boxes. The vendor now offers a quantity discount of $0.20 per box if the company buys tablets in order sizes of 10,000 boxes. Determine the before-tax benefit or loss of accepting the quantity discount. (Assume the carrying cost remains at $0.40 per box whether or not the discount is taken.)

• A) $1,000 loss
• B) $1,000 benefit
• C) $ 500 loss
• D) $ 500 benefit
• E) $ 0 (The change would not affect profits.)

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Definitions:

Teamwork

The collaborative effort of a group to achieve a common goal or complete a task in the most efficient and effective way.

Referent Power

arises from an individual's appeal or charisma, leading others to identify with them, often based on admiration or respect.

Personal Identification

A psychological process whereby an individual aligns their attitudes and behaviors with those of another person or group.

Subordinate

An individual who is under the authority or control of another, often in a workplace hierarchy.