Answer the Following Questions Using the Information Below

question 121

Multiple Choice

Answer the following questions using the information below:
Digital Goods is a distributor of DVDs. DVD Mart is a local retail outlet which sells blank and recorded DVDs. DVD Mart purchases tapes from Digital Goods at $10.00 per DVD; DVDs are shipped in packages of 25. Digital Goods pays all incoming freight, and DVD Mart does not inspect the DVDs due to Digital Goods' reputation for high quality. Annual demand is 208,000 DVDs at a rate of 4,000 DVDs per week. DVD Mart earns 15% on its cash investments. The purchase-order lead time is one week. The following cost data are available:

-What are the relevant total costs?

• A)$5,697
• B)$2,829
• C)$8,029
• D)$2,868

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Definitions:

Private Markets

are markets where transactions are conducted directly between two parties without being publicly traded on an exchange.

Repeat-purchase Item

A good or service that consumers buy frequently or repeatedly over time, indicating loyalty or sustained need.

Frequent Transaction

Regular or repeated exchanges or dealings, especially in a financial context.

Imperfect Information Problem

The imperfect information problem occurs when one or more parties in a transaction have less information than the other(s), leading to decisions that may not be optimal.