Short Grass Incorporated Is a Distributor of Golf Balls

Multiple Choice

Short Grass Incorporated is a distributor of golf balls. Martin's Golf Supplies is a local retail outlet which sells golf balls. Martin's purchases the golf balls from Short Grass Incorporated at $0.95 per ball; the golf balls are shipped in cartons of 72. Short Grass Incorporated pays all incoming freight, and Martin's Golf Supplies does not inspect the balls due to Short Grass' reputation for high quality. Annual demand is 162,520 golf balls at a rate of 3591 balls per week. Martin's Golf Supplies earns 12% on its cash investments. The purchase-order lead time is one week. The following cost data are available:

Purchasing at the EOQ recommended level, what are the relevant total costs? (Round costs to the nearest cent and quantities to the nearest whole number. Your answer might be slightly different from the best answer due to rounding.)

A) $1584
B) $2313
C) $1157
D) $3168