Firm AMZN holds one type of finished product A. The total warehousing cost (including warehouse leasing cost, warehouse employee salary and benefit, warehouse manager salary and benefit, and warehouse utility cost) is $2,400,000 in 2013. Due to obsolescence, this inventory lost its market value by $1,000,000 in 2013. AMZN estimated that the average inventory level for product A is 500,000 units during 2013. The unit purchasing cost of A is $20. In addition, the risk free interest rate is 2% per year. What is your estimate of the inventory holding cost per year in percentage (rounded to the nearest integer)?

Firm AMZN holds one type of finished product A. The total warehousing cost (including warehouse leasing cost, warehouse employee salary and benefit, warehouse manager salary and benefit, and warehouse utility cost) is $2,400,000 in 2013. Due to obsolescence, this inventory lost its market value by $1,000,000 in 2013. AMZN estimated that the average inventory level for product A is 500,000 units during 2013. The unit purchasing cost of A is $20. In addition, the risk free interest rate is 2% per year. What is your estimate of the inventory holding cost per year in percentage (rounded to the nearest integer)?

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 4E: The following production data came from the records of Olympic Enterprises for the year ended...

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