Question

Given the following data on a hardware item stocked by Andreas Wieland's paint store in Copenhagen, should the quantity discount be taken?

D=4,410 units, S = $20, H = $4; P=$1
Discount price = $0.75
Quantity needed to qualify for discount = 4,410 units
The total cost without the discount is $__ (round your response to the nearest whole number).
The total cost with the discount is $__ (round your response to the nearest whole number).
Should the quantity discount be taken?
a. Nο
b. Yes

Answer 1

To determine whether the quantity discount should be taken, compare the total costs with and without the discount. In this case, it is more cost-effective to take the quantity discount.

Step-by-step explanation:

To determine whether the quantity discount should be taken, we need to compare the total cost without the discount to the total cost with the discount. Without the discount, the total cost is calculated by multiplying the quantity (D) by the unit cost (S+H+P). In this case, the total cost without the discount is $20,899. With the discount, the total cost is calculated by multiplying the quantity discounted (D) by the discounted price (P), and adding the remaining quantity (D - discount quantity) multiplied by the unit cost (S+H+P). In this case, the total cost with the discount is $20,572. Since the total cost with the discount is lower than the total cost without the discount, it is more cost-effective to take the quantity discount. The answer is b. Yes.