Crystal Clear Company Purchases 50,000 Gallons of Distilled Water Each

question 164

Multiple Choice

Crystal Clear Company purchases 50,000 gallons of distilled water each year.Ordering costs are $100 per order,and the carrying cost,as a percentage of inventory value,is 80 percent.The purchase price to CCC is $0.50 per gallon.Management currently orders the EOQ each time an order is placed.The supplier is now offering a quantity discount of $0.03 per gallon if CCC orders 10,000 gallons at a time.Should CCC take the discount?

• A) From a cost standpoint,CCC is indifferent.
• B) No,the cost exceeds the benefit by $500.
• C) No,the cost exceeds the benefit by $1,000.
• D) Yes,the benefit exceeds the cost by $500.
• E) Yes,the benefit exceeds the cost by $1,120.

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Definitions:

Marriage Squeeze

A sex imbalance in the ratio of available unmarried women and men.

Marriage Squeeze

A demographic imbalance where the number of potential spouses does not align with the number of individuals seeking marriage, affecting marriage rates.

Sex Imbalance

A demographic condition where there is an uneven number of males and females in a population, often leading to various social and economic issues.

Recreational Activities

Leisure time activities performed for enjoyment, amusement, or pleasure.