QUESTION 36 The Tangent Corporation wants to move 500 freezers this year from it

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QUESTION 36 The Tangent Corporation wants to move 500 freezers this year from its plant to its warehouse and then to its own retail store. Freezer demand at the local retail store has averaged 4 units per working day. The plant shipped 10 shipments of 50 units each to the warehouse over the course of the year and shioments of 4 units to the retaler The tilowing dota has been collected PRODUCT CHARACTERISTICS Selling Price Variable Manufacturing Cost Product Weight Product Size- 5,000/Freazer $3,000/Freezer 700 Lbs Unit 100 Cublc Feet per Unt MATERIAL HANDLING: RATE (ncludes both loading and unleading) SHIPMENT SIZE ess than 20,001 0001 ls to 40,000 s 0,001 lbs and over per unit hande 4 per unit handed $3 per·nt handed The annual material handling cost is for the warehouse to the retailer is O A $500

Explanation / Answer

The warehouse ships a shipment of 4 units to retailers.

Shipment size = 4 x weight per unit = 4 x 700 = 2800 lbs

Since this shipment size comes within a range of “X <= 20,001 lbs” the material handling rate per unit is $5.

The annual material handling cost for the warehouse to the retailer = handling rate x annual units shipped = $5 x 500 = $2,500

annual material handling cost for the warehouse to the retailer = $2,500

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