A manufacturing company uses 25000 components at an even rate during a year. Each order placed with the supplier of the components is for 2000 components, which is the economic order quantity. The company holds a buffer inventory of 500 components. The annual cost of holding one component in inventory is $2. What is the total annual cost of holding inventory of the component?

(a) $200

(b) $2500 (c). $3000

(d) $4000 (2 marks) ACCA F2 Management Accounting