Cycles De Oro Produces 120,000 High-Tek Bikes a Year and Orders

question 58

Multiple Choice

Cycles de Oro produces 120,000 high-tek bikes a year and orders the brake assembly from IKON for $15.40 each.The order cost is $84 and Cycles estimates their inventory carrying costs are 15%.What is their total ordering cost per year?

• A)$7,968
• B)$3,412
• C)$4,118
• D)$6,437

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Definitions:

Differentiated Products

Products that are distinguished from similar products by unique characteristics, such as quality, brand, or features.

Oligopoly

A market structure characterized by a small number of large firms that dominate the market, leading to limited competition and potentially higher prices for consumers.

Monopolistic Industry

An industry structure characterized by a single producer or a handful of producers who control the majority of the market share, limiting competition.

Single, Unique Product

A product that is the only one of its kind and has no close substitutes in the market.