Answer the Following Questions Using the Information Below:
Vision Company

question 77

Multiple Choice

Answer the following questions using the information below:
Vision Company sells optical equipment. Blitz Company manufactures special glass lenses. Vision orders 11,400 lenses per year, 200 per week, at $35 per lens. Blitz covers all shipping costs. Vision earns 25% on its cash investments. The purchase-order lead time is 2.5 weeks. Vision sells 225 lenses per week. The following data are available:
$\begin{array} { l } \text {Relevant ordering costs per purchase order }&\$41.25 \\ \text {Relevant insurance, materials handling, breakage, }& \\ \text { and so on, per year}&4.50 \\\end{array}$

-What is the reorder point?

• A) 500 lenses
• B) 562.5 lenses
• C) 1050 lenses
• D) 1062.5 lenses

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Definitions:

Production Bottleneck

A condition that occurs when product demand exceeds production capacity.

Manufacturing Costs

Expenses directly related to the production of goods, including raw materials, labor, and overhead expenditures.

Product Cost Concept

The product cost concept encompasses all costs associated with the creation of a product, including materials, labor, and overhead, used for pricing and inventory valuation.

Opportunity Cost

The forfeit of potential benefits from different options when a specific choice is made.