Reference no: EM132620431

O'Tooley Conservative Flags is a local retail outlet which sells flags. O'Tooley purchases the flags from Puton Inc. at $5.75 per flag; the golf balls are shipped in boxes of 24, FOB destination. Annual demand is 72,800 flags at a rate of 1402 flags per week. O'Tooley Conservative Flags earns 12% on its cash investments. The purchase order lead time is one week.

The following cost data are available:

Relevant ordering costs per purchase order                               $225.00

Relevant insurance, materials handling, breakage, etc., per year         $1.77

Problem 1: If O'Tooley Conservative Flags makes an order (1/12 of annual demand) once per month, what are the relevant total costs?

A) $1,500.00

B) $2,085.67

C) 2,225.00

D) $3,000.00

E) $680.00