QUESTION 7 (Continued) To determine the acceptability of the quantity discount, it is necessary to compare the sav ings on the cost of the goods with the increase in inventory policy costs Purchase Price Savings(52 000 x $0.01) 520 Less: Increase in Inventory Policy Costs($2 520-$2040) Net Gain/Benefit The firm should therefore avail itself of the discount offeredAugust 2003 QUESTION 7 (Continued) To determine the acceptability of the quantity discount, it is necessary to compare the savings on the cost of the goods with the increase in inventory policy costs: Purchase Price Savings (52 000 ×$0.01) $520 Less: Increase in Inventory Policy Costs ($2 520 - $2 040) 480 Net Gain/Benefit $ 40 The firm should, therefore, avail itself of the discount offered