Question

Alumina Ltd. produces a specialty aluminum product, and has the following information available concerning its inventory...

Alumina Ltd. produces a specialty aluminum product, and has the following information available concerning its inventory items:

      Relevant ordering costs per purchase order             $470

      Relevant carrying costs per year for each package:

            Required annual return on investment                13%

            Required other costs per year                                 $5

Annual demand is 33,000 packages per year. The purchase price per package is $49.

What are the relevant total costs at the economic order quantity?

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