Use the Following to Answer the Questions Below

question 111

Multiple Choice

Use the following to answer the questions below.
The Burdell Wheel and Tire Company assembles tires to wheel rims for use on cars during manufacture of vehicles by the automotive industry.Burdell wants to locate a low-cost supplier for the tires he uses in his assembly operation.The supplier will be selected based on total annual cost to supply Burdell's needs.Burdell's annual requirements are for 25,000 tires,and the company operates 250 days a year.The following data are available for two suppliers being considered.

-Refer to the instruction above.What are the annual inventory costs if the lower inventory cost supplier is selected?

• A)$5,220
• B)$9,600
• C)$6,600
• D)$6,320

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Definitions:

Monopoly Theory

The economic theory that examines the consequences and efficiency of a single seller (a monopoly) controlling the entire market for a particular good or service.

Profit-Maximizing

The process of adjusting production and pricing to achieve the highest possible profit from business operations.

MRP Capital

The marginal revenue product of capital, which is the additional revenue generated by one more unit of capital.

MRP Labor

Marginal Revenue Product of Labor: the additional revenue generated by employing one more unit of labor, assuming all other factors of production remain constant.