Question

Champs Sports Bar in State College, PA has decided to perform a total cost analysis on vodka suppliers. Consumption is currently 6,000 bottles per year. Demand is predicted to stay at that level for the next few years. The current supplier, Byron's, charges $9.50 per bottle and packs 288 bottles in a crate. The cost to ship the crate is $15. Another potential source of vodka is Pancho.  Pancho charges $9.00 per bottle and ships 100 bottles in a crate at $20 per crate. Assume that a partial crate may be purchased. What is the total annual cost to supply vodka from the current supplier

Answer 1

Annual total cost = $55,200

Step-by-step explanation:

As per the data given in the question, computation are as follows:

Consumption = 6,000 bottles

Cost per bottle = $9

Cost = $9 × 6,000 bottles

= $54,000

Number of crates = 6,000 ÷ 100

= 60 crates

Cost per crate = $20

Total crate cost = $20 × 60 crates

=$1,200

Hence, Annual total cost = $54,000 + $1,200

= $55,200