Sarah’s Computer City
sells 5,000 boxes of CD-RW compact discs per year. She determined that
she pays $50 to process an order for discs. Her purchase price is $6 for
each box of discs and she has determined that storage costs for one
year are 25 percent of the purchase price. Sarah’s vendor said that if
she purchased 1,000 boxes at a time, she would receive a 10 percent
discount. The total cost formula is
What is Sarah’s annual carrying cost if she does not take advantage of the discount?
Answer