Use the Following to Answer the Questions Below

question 45

Multiple Choice

Use the following to answer the questions below.
The Steele Bike Company assembles bicycles for a major retail toy outlet.The main purchase is bicycle frames for making these bicycles.Dan Steele,the owner,wants to locate a low-cost supplier for the frames used in this assembly operation.The supplier will be selected based on total annual cost to supply Steele's needs.Annual requirements are for 100,000 frames,and the company operates 200 days a year.Two suppliers,Acme and State,have quoted the same price for the frames,but quantities,lead times and shipping costs are considerably different.The following data are available for the two suppliers.

-Refer to the instruction above.What are the total annual costs if State is the supplier selected?

• A)$4,026,450
• B)$110,450
• C)$4,001,050
• D)$4,016,550

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Definitions:

Return on Investment

A measure used to evaluate the efficiency of an investment, calculated by dividing the profit earned on an investment by the cost of that investment.

Controllable Margin

The portion of profit or margin that can be directly influenced by management decisions and actions.

Operating Assets

Assets used in the daily operations of a business to generate revenue, including cash, inventory, and equipment.

Return on Investment

A performance measure used to evaluate the efficiency of an investment or compare the efficiencies of several different investments.