Scenario 11 -Use the Information in Scenario 11

question 22

Multiple Choice

Scenario 11.4 - The Gutter
A rodent infestation has left a landlord with a major cleanup job;in fact,the cleanup will consist of ripping out all the walls and ceilings of an 1860 square foot house to replace them.A trip to the local home improvement store reveals that 4'x8' sheets of drywall have three price points as indicated in the table.Another consideration for the landlord is that he is equipped with only a humble half-ton pickup truck,that can hold at most 20 sheets.His truck sips fuel,so he considers only wear and tear on his vehicle at $5 to haul all the sheets he will use for the job.The holding percentage is 20%.The landlord believes the entire job - all walls and ceiling - will require 10,080 square feet of drywall.
$$\begin{array} { | l | c | } \hline{ \text { Purchase Quantity } } & \text { Price Per Sheet } \\\hline 1 - 20 & \$ 9.40 \\\hline 21 - 100 & \$ 9.30 \\\hline 101 \text { or more } & \$ 9.20 \\\hline\end{array}$$
-Use the information in Scenario 11.4 to determine the best number of sheets to purchase at a time.(Assume he can buy only an integer-multiple of sheets. )

• A)101
• B)41
• C)21
• D)20

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Definitions:

Net Sales

The revenue a company earns from sales once it subtracts returns, allowances for damaged or missing products, and discounts.

Asset Efficiency

A measure of how effectively a company uses its assets to generate revenue.

Salvage Value

The projected resale price of an asset upon reaching the end of its useful period, accounted for in computing depreciation.

Plant Assets

Long-term tangible assets that are used in the operation of a business and are not intended for resale.