Video Images is a distributor of DVDs. Quick-Disk Mart is a local retail outlet which sells blank and recorded DVDs. Quick-Disk Mart purchases tapes from Video Images at $3.00 per DVD. DVDs are shipped in packages of 20. Video Images pays all incoming freight, and Quick-Disk Mart does not inspect the DVDs due to Video Images reputation for high quality. Annual demand is 104,000 DVDs at a rate of 4,000 DVDs per week. Quick-Disk Mart earns 20% on its cash investments. The purchase-order lead time is two weeks. The following cost data are available: Relevant ordering costs per purchase order $90.50 Carrying costs per package per year: Relevant insurance, materials handling, breakage, etc., per year $ 4.50 What is the required annual return on investment per package? A. $12.00 B. $2.50 C. $60.00 D. $0.60

Question

contestada

Respuesta :

valetta valetta · Answer 1 · 2019-09-03T12:15:59+02:00

Answer:

option (A) $12.00

Explanation:

Data provided:

Quick-Disk Mart purchase tapes from Video Images at price = $3.00 per DVD

Number of packages shipped = 20

Returns earned = 20% of the cash investments

Now,

the total investment per package = $3.00 × 20 = $60.00

Thus,

the return on investment per package

= 0.20 × total investment per package

or

the return on investment per package = 0.20 × $60.00

or

the the return on investment per package = $12.00

Hence, the correct answer is option (A) $12.00