Aberwald Corporation Expects to Sell 120,000 Memory Chips This Year

Multiple Choice

Aberwald Corporation expects to sell 120,000 memory chips this year. Aberwald has determined that it costs $3 to carry each chip in inventory and $50 each time an order for raw materials is placed. Assuming Aberwald always orders the EOQ amount, what will be its total ordering cost this year?

A) $7,2000
B) $260,000
C) $3,000
D) $800
E) $6,000