Detailed Answer
Answer (A) is correct. If Alpha makes the special purchase of 6 months of inventory (180,000 cases ÷ 30,000 cases per month), the average inventory for the 6-month period will be $900,000 [(180,000 × $10) ÷ 2]. If the special purchase is not made, the average inventory for the same period will be the average monthly inventory of $180,000 [(30,000 × $12) ÷ 2]. Accordingly, the incremental average inventory is $720,000 ($900,000 – $180,000), and the interest cost of the incremental 6-month investment is $32,400 [($720,000 × 9%) ÷ 2].