The mechanical engineer at Robinson Manufacturing has developed a new gearbox. The local distributor expects to increase his sales by 30% over the past year due to this new development. Last year's sales were $70,000 at a selling price of $100 per unit. The manager would like to cut costs as much as possible and comes to you for advice.
Relevant cost information includes:

Warehouse space	$3.00/unit
Material handling expense	$2.00/unit
Insurance premium	$1.00/unit
Total ordering cost	$150.00/per order

What is the total cost of this inventory decision?

Multiple Choice

• $640.85

• $739.52

• $1,279.85

• $2,556.59