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Lethal Co sells a particular product for which it pays $6 per unit. Annual sales are 60,000 units and demand 1 accrues evenly

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Answer #1

OPTION C: $362550

EXPLANATION:

Ordering cost = total number of orders x cost per order

= (60000/1200) x $15

= $750

Carrying cost = average inventory x carrying cost per unit per annum

= (1200/2) x $3

= $1800

therefore,

total annual cost = cost of inventory purchased + ordering costs + carrying costs

= (60000 x $6) + $750 + $1800

= $362550

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