Answer the Following Questions Using the Information Below:
Short Grass

question 61

Multiple Choice

Answer the following questions using the information below:
Short Grass Incorporated is a distributor of golf balls. Martin's Golf Supplies is a local retail outlet which sells golf balls. Martin's purchases the golf balls from Short Grass Incorporated at $0.75 per ball; the golf balls are shipped in cartons of 72. Short Grass Incorporated pays all incoming freight, and Martin's Golf Supplies does not inspect the balls due to Short Grass' reputation for high quality. Annual demand is 155,520 golf balls at a rate of 2,991 balls per week. Martin's Golf Supplies earns 12% on its cash investments. The purchase-order lead time is one week. The following cost data are available:
$\begin{array} { l } \text { Relevant ordering costs per purchase order}&\$125.00 \\ \text {arrying costs per carton per year: }& \\ \text {Relevant insurance, materials handling, }& \\ \text {breakage, etc., per year }&\$0.77 \\\end{array}$

-Purchasing at the EOQ recommended level,what are the relevant total costs?

• A) $1,500.00
• B) $1,978.60
• C) $989.37
• D) $3,000.00

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Definitions:

Recognize Income

The process of reporting income on the tax return in the year it is received or accrued, according to IRS rules.

Tax Purposes

This encompasses reasons or considerations related to the assessment, computation, and payment of taxes.

Employer-Paid Premiums

Premiums paid by employers for employee benefits like health insurance, usually not taxable income for the employee.

Life Insurance

Life Insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person.