Figure 8-3 Martin Company Uses 625 Units of a Part

question 22

Multiple Choice

Figure 8-3 Martin Company uses 625 units of a part each year. The cost of placing one order is $8; the cost of carrying one unit in inventory for a year is $4.
-Refer to Figure 8-3. Martin has decided to begin ordering 40 units at a time. What is the average annual carrying cost of Martin's new policy?

• A) $80
• B) $60
• C) $160
• D) $4
• E) $90

---

Definitions:

Price Elasticity

The degree to which the demand or supply of a product changes in response to a change in price.

Crude Oil

A naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials.

Production

The process of creating goods or services by combining labor, land, and capital to generate value.

Total Revenues

The overall amount of money generated by a business, organization, or individual from its activities, before any expenses are subtracted.