Scenario 9.9 "Gollee Those Cats Sure Go Through a Lot of Food

question 15

Multiple Choice

Scenario 9.9
"Gollee those cats sure go through a lot of food," Geoff exclaimed as he saw the shopping list pad that had been pre-printed with the words "cat food" at the top. He pondered a different approach to shopping for the furry little darlings, reviewed his shopping records, and discovered the following. The price of cat food has held steady at 89 cents per can. Despite feigning indifference, each of the seven cats nibbles their way through an average of one can per day, three hundred sixty five days a year. The price of gasoline has held constant at $3.50 per gallon and his pickup uses a gallon each way to the cat food store. The cost to hold a can of cat food is 10% of the unit price.
-Use the information in Scenario 9.9 to determine the combined cost of goods and inventory if Geoff decides to follow the economic order quantity model?

• A) $2,415
• B) $2,218
• C) $2,274
• D) $2,330

---

Definitions:

Gold Standard

A monetary system in which the value of a country's currency is directly linked to a specified amount of gold, facilitating stable exchange rates and limiting inflation.

Monetary Policies

Government or central bank policies aimed at controlling the money supply and interest rates to influence economic activity.

Money Supply

The sum total of all assets in the form of money within an economy at a specific instance, including all forms of cash, coinage, and the funds kept in both savings and current accounts.

Purchasing Power Parity

A theory in economics that compares different countries' currencies through a "basket of goods" approach, aiming to determine the relative value of two currencies.