Cindy's Toys Has an Average Inventory of 1,800 Teething Rings

question 314

Multiple Choice

Cindy's Toys has an average inventory of 1,800 teething rings. The carrying cost per unit per year is
5¢. Cindy places an order for 3,600 teething rings on the first of each month and the order cost is
$25. What are the total restocking costs under the current system?

• A) $45
• B) $90
• C) $150
• D) $164
• E) $300

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Definitions:

Fixed Cost

Costs that do not change with the level of output produced, such as rent, salaries, and insurance premiums.

Economic Profit

The difference between total revenue and total economic costs (including both explicit and implicit costs), reflecting a firm's financial performance.

Perfectly Competitive

A market structure characterized by many buyers and sellers, no barriers to entry, and a homogeneous product.

Long Run

A period in economics where all factors of production and costs are variable, allowing for full industry adjustment.