Cost-effective Way to Purchase Plywood for Skateboard Company

Which option describes the most cost-effective way for a skateboard company to purchase plywood? The answer is C

Cost-Effective Way to Purchase Plywood

Purchasing plywood in bulk is crucial for a skateboard company looking to maximize cost-effectiveness in its production process. In this scenario, the best option for the company would be to choose a pallet of 500 sheets for $3,500. Let's break down the cost-effectiveness of this option compared to the other choices:

Option A: A pallet of 100 sheets for $1,000

While this option may seem cheaper at first glance, the cost per sheet comes out to $10. This means that the company would be paying $10 per sheet, which is higher compared to the other options.

Option B: A pallet of 200 sheets for $1,800

With this option, the cost per sheet is $9. While the price per sheet is slightly lower than option A, it is still not as cost-effective as the optimal choice.

Option C: A pallet of 500 sheets for $3,500

Choosing this option results in a cost of $7 per sheet, making it the most cost-effective choice among the given options. By purchasing a larger quantity of plywood sheets at a lower cost per sheet, the skateboard company can save money in the long run.

Option D: A pallet of 1,000 sheets for $8,000

While this option offers the lowest cost per sheet at $8, it may not be the most efficient choice for the company. Purchasing 1,000 sheets may lead to excess inventory or storage costs, which can offset the initial cost savings.

Therefore, the most cost-effective way for a skateboard company to purchase plywood would be to choose a pallet of 500 sheets for $3,500. By balancing cost and quantity, the company can streamline its production process and maintain profitability in the long term.

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