What is the annual total costs of post card inventory?

User Generated

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Business Finance

Description

Post Card Depot, an large retailer of post cards, orders 4,219,610 post cards per year from its manufacturer. Post Card Depot plans on ordering post card 6 times over the next year. Post Card Depot receives the same number of post cards each time it orders. The carrying cost is $0.17 per post card per year. The ordering cost is $426 per order.

What is the annual total costs of post card inventory?

(Round the answer to two decimal places).

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Explanation & Answer

Hello!

Regardless of the number of orders, the total number of post cards ordered in a year is 4,219,610 and the cost is

4,219,610 * 0.17 = 717,333.7 ($).

The cost of 6 orders is

6 * 426 = 2556 ($).

The total cost is therefore

717,333.7 + 2556 = 719889.70 ($).

Please ask if something is unclear.


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