Accounting Information Systems 8th Edition by James Hall

Exercise 48

Refer to the equation for the EOQ in the text. Car Country, a local Ford dealer, sells 1,280 small SUVs each year. Keeping a car on the lot costs Car Country $200 per month, so the company prefers to order as few SUVs as is economically feasible. However, each time an order is placed, the company incurs total costs of $300. Of this $300, $240 is fixed and $60 is variable. Determine the company's economic order quantity.
A) 8
B) 16
C) 18
D) 56
E) 62