Suppose the Campus Bookstore Purchases 50,000 Boxes of Writing Tablets

question 69

Multiple Choice

Suppose the Campus Bookstore purchases 50,000 boxes of writing tablets every year.Ordering costs are $100 per order and carrying costs are $0.40 per box.Moreover,management has determined that the EOQ is 5,000 boxes.The vendor now offers a quantity discount of $0.20 per box if the company buys tablets in order sizes of 10,000 boxes.Determine the before-tax benefit or loss of accepting the quantity discount.(Assume the carrying cost remains at $0.40 per box whether or not the discount is taken.) ​

• A)​$1,000 loss
• B)​$1,000 benefit
• C)​$ 500 loss
• D)​$ 500 benefit

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Definitions:

Benefits Programs

A range of programs offered by employers to provide various types of health care, retirement, and other benefits to their employees.

Cafeteria Benefit Plans

Employee benefit programs that allow workers to choose from a variety of pre-tax benefits options, akin to a cafeteria selecting various meals.

Administration Complexity

The degree of intricacy and complication involved in managing the operations of an organization, often influenced by regulation, size, and structure.

Flexible Benefits Plan

A benefits plan that allows employees to choose from a variety of pre-tax benefit options based on their specific needs, such as healthcare, retirement savings, and childcare.