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Lawnox a manufacturer of lawn mowers, predicts that it will purchase 204.000 spark plugs next year. Lawnox estimates that 17 000 spark plugs will be required each month. A supplier quotes a price of $9.00 per spark plug. The supplier also offers a special discount option: If all 204,000 spark plugs are purchased at the start of the year a discount of 2% off the $9.00 price will be given. Lawnox can investits cash at 10% per year. It costs Lawnox $220 to place each purchase order. Read the requirements Requirement 1. What is the opportunity cost of interest forgone from purchasing all 204,000 units al the start of the year instead of in 12 monthly purchases of 17.000 units per order? Let's begin the calculation for the opportunity cost of interest forgone by first determining the formula, then calculate the opportunity cost. = Opportunity cost A Requirements - X 1. What is the opportunity cost of interest forgone from purchasing all 204,000 units at the start of the year instead of in 12 monthly purchases of 17,000 units per order? 2. Would this opportunity cost be recorded in the accounting system? Why? 3. Should Lawnox purchase 204,000 units at the start of the year or 17.000 units each month? Show your calculations. 4. What other factors should Lawnox consider when making its decision? Print Done Choose from any drop-down list and then click Check Answer. b parts remaining Clear All Check

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