When buying something it is important to consider the total costs involved with making that purchase. For example, when you buy something from Sams Club or Amazon you are paying the price of that item from Sams or Amazon, but you are actually paying a little bit more (or your parents/guardians are) because of the annual membership fee of being a Sams or Amazon member.

Oftentimes businesses need to consider additional costs beyond simply the price of a good or service when considering between two suppliers of an item. This perspective, considering more than just the price of the good or service purchased, is called the Total Cost of Ownership. Companies often should and do consider many more costs than we will consider in the following example.

Purple Reign, an apparel manufacturer located in Minneapolis, sources the fabric used for clothes from outside vendors. Recently, Purple Reign has decided to compare pricing on a black roll of fabric used to manufacture 10,000 t-shirts. Purple Reign must decide between a fabric provider located in Bangladesh versus one located in Graniteville, South Carolina. Use the chart below to find a TCO from each provider to help Purple Reign decide which provider should be utilized to provide the black fabric.

	PROVIDER
	Bangladesh	Graniteville, SC
Cost of Fabric	$ 1,250.00	$ 3,000.00
Transportation
Freight movement	$ 1,800.00	$ 325.00
Customs Duties	$ 150.00	$ -
Ordering Costs	$ 150.00	$ 50.00
Quality Costs (i.e. scrap/rework)	2% of cost of fabric	1% of cost of fabric

What are the quality costs of the fabric from the Bangladesh provider?

Group of answer choices

Less than or equal to $20

Greater than $20 but less than or equal to $25

Greater than $25 but less than or equal to $300

Great than $30