$5,000
$4,500
$5,500
$6,000
Answer is Right!
Answer is Wrong!
The correct answer is A. $5,000.
The annual relevant carrying cost is the product of the average inventory and the annual relevant carrying cost per unit. In this case, the average inventory is 2000 units and the annual relevant carrying cost per unit is $5, so the annual relevant carrying cost is $5,000.
Option B is incorrect because it is the annual relevant carrying cost if the average inventory is 1500 units. Option C is incorrect because it is the annual relevant carrying cost if the average inventory is 2500 units. Option D is incorrect because it is the annual relevant carrying cost if the annual relevant carrying cost per unit is $6.