A Company Is Planning for Its Financing Needs and Uses

question 35

Multiple Choice

A company is planning for its financing needs and uses the basic fixed-order quantity inventory model.Which of the following is the total cost (TC) of the inventory given an annual demand of 10,000,setup cost of $32,a holding cost per unit per year of $4,an EOQ of 400 units,and a cost per unit of inventory of $150?

• A) $1,501,600
• B) $1,498,200
• C) $500,687
• D) $499,313
• E) None of the above

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Definitions:

Invested Assets

Assets that are purchased or acquired for the purpose of generating income or appreciation.

Operating Income

A company's profit after subtracting operating expenses, such as wages and cost of goods sold, from its gross revenue.

Return on Investments

A measure of the profitability of an investment, calculated by dividing the net profit from the investment by the total amount invested.

Budget Performance Report

A financial report comparing the actual financial activity to the forecasted or budgeted financial performance.