Use the Information Below to Answer the Following Question(s)

question 54

Multiple Choice

Use the information below to answer the following question(s) .Office Supply House purchases 4,160 reams of paper per year, ordered in lots of 80 reams per week at $150 per ream.The vendor covers all shipping costs.Office Supply House is not required to inspect the shipment upon entry.Office Supply House earns 20% on its cash investments.The purchase order lead time is two weeks.The following cost data are available:

-What are the total relevant costs assuming the quantity ordered equals 80 reams?

• A)$3,913.65
• B)$3,948.50
• C)$4,075.25
• D)$4,165.00
• E)$5,326.49

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Definitions:

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing as scale is increased.

Value Chains

The full range of activities that businesses go through to bring a product or service from conception to delivery to the end user.

Economies of Scope

Cost advantages that a business obtains due to a broader range of operations or production levels.

Horizontal Integration

A strategy where a company acquires or merges with other companies at the same stage of production in its industry, seeking to increase market share.