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Seasonal Scents, Inc. is a small batch manufacturer of reed diffusers. The essential oils used in the mixture are purchased from a supplier in 4
Seasonal Scents, Inc. is a small batch manufacturer of reed diffusers. The essential oils used in the mixture are purchased from a supplier in 4 ounce bottles. The supplier has offered Seasonal Scents two different shipping models to choose from: either (1) Seasonal Scents can pay a flat shipping cost of $50 per month regardless of the number of bottles ordered or (2) Seasonal Scents can pay $5 per bottle ordered. Which of the following statements is correct? A. If Seasonal Scents expects to purchase 12 bottles a month, its shipping costs would be higher under shipping option 1 than under shipping option 2. B. The unit contribution margin per diffuser would be higher under shipping option 2. C. Shipping option 1 is considered the lower operating leverage shipping option. D. At a monthly purchase volume of 10 bottles, Seasonal Scents will be indifferent between the two shipping options. E. More than one of the above statements is correct
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