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Part 1

Denever Corporaion orders 10,400 units per year, at $10 per unit, FOB destination. Denever Corporation earns 12% on its cash investments. The purchase order lead time is 3 weeks. The following data are available:

Estimated ordering costs per purchase order	$10
Estimated insurance, materials handling, breakage, and so on, per year	$3
Actual ordering costs per order	$15

What is the cost of the prediction error?

A. $310

B. $170

C. $280

D. $350

E.None of these.