Scenario 9.5 Tom Bergman, Owner and Operator of the Earplug Superstore, Is

question 123

Multiple Choice

Scenario 9.5
Tom Bergman, owner and operator of the Earplug Superstore, is reviewing the costs associated with the store's best-selling hearing aid, the BZ15. The data available to Dr. Bergman concerning this device follow.
Demand = 25 units/week
Order cost = $3/order
Holding cost = $1.50/unit/year
The Earplug Superstore operates 52 weeks a year.
-An item experiences an annual demand of 7,200 units. It costs $8 to hold an item in inventory for one year and $16 to place an order. If the EOQ model is used, what is the time between orders? Assume that there are 52 business weeks in a year.

• A) less than 1 week
• B) greater than 1 week but less than or equal to 2 weeks
• C) greater than 2 weeks but less than or equal to 3 weeks
• D) greater than 3 weeks

---

Definitions:

Liability Account

A category in financial accounting that represents debts or obligations a company owes to others.

Subsidiary Ledger

A detailed ledger that contains the individual accounts necessary to support a major (control) account organized in the general ledger.

Alphabetically

Ordered or arranged in accordance with the sequence of the letters of the alphabet.

Accounts Receivable Subsidiary Ledger

A detailed ledger that contains individual customer accounts and tracks their transactions separate from the general ledger.