Answer the Following Questions Using the Information Below:
Globe Inc

question 134

Multiple Choice

Answer the following questions using the information below:
Globe Inc. is a distributor of DVDs. DVD Mart is a local retail outlet which sells blank and recorded DVDs. DVD Mart purchases tapes from Globe at $25.00 per DVD; DVDs are shipped in packages of 60. Globe pays all incoming freight, and DVD Mart does not inspect the DVDs due to Globe's reputation for high quality. Annual demand is 312,000 DVDs at a rate of 6,000 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:
$\begin{array} { l } \text { Relevant ordering costs per purchase order}&\$114.50 \\ \text {arrying costs per package per year: }& \\ \text {Relevant insurance, materials handling, }& \\ \text {breakage, etc., per year }&\$4.50 \\\end{array}$

-What is the economic order quantity?

• A) 64.08 packages
• B) 21.04 packages
• C) 37.50 packages
• D) 72.03 packages

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Definitions:

Tangible Capital Assets

Physical assets owned by a firm that are used in its operations over several years, including buildings, machinery, vehicles, and equipment.

Government

The system or group of people governing an organized community, often a state, and the organization by which this group exercises authority and performs functions.

Unexpired Service Potential

the remaining usefulness or service capacity of an asset, usually in the context of public sector accounting.

CICA PSA Handbook

The Public Sector Accounting Handbook issued by the Canadian Institute of Chartered Accountants, providing guidelines for accounting practices in the public sector.