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Luzon Fabricators Inc estimates that 60000 special components will be used in the manufacture of a specialty steel window for the whole next year Its supplier quoted a price of P60 per component

Luzon Fabricators, Inc. estimates that 60,000 special components will be used in the manufacture of a specialty steel window for the whole next year. Its supplier quoted a price of P60 per component. Luzon prefer to purchase 5,000 units per month, but its supplier could not guarantee this delivery schedule. In order to ensure availability of these components, Luzon is considering the purchase of all 60,000 units at the beginning of the year. Assuming Luzon can invest cash at 8%, the company’s opportunity cost of purchasing the 60,000 units at the beginning of the year is
A. P132,000               C. P150,000
B. P144,000                D. P264,000 

Jun 20 2021 View more View Less

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