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Inventory held last year                  Total inventory            $2,327,000      Inventory-related expense            $1,886,000 Inventory held previous year                  Total inventory            2,119,000      Inventory-related expense            1,861,000 EXPLAIN THE COMPUTATION FOR FIXED HOLDING COST when the holding cost % is 12.019% *ANSWER is given, we need the explanation on why the formula is like that. THANK YOU Formula: = Inventory related-expense held last year x (1- Holding Cost %) = $1,886,000 x (1-12.0192%) = $1,886,000 x 0.8798 = $1,659,317.31

Inventory held last year                  Total inventory            $2,327,000      Inventory-related expense            $1,886,000 Inventory held previous year                  Total inventory            2,119,000      Inventory-related expense            1,861,000 EXPLAIN THE COMPUTATION FOR FIXED HOLDING COST when the holding cost % is 12.019% *ANSWER is given, we need the explanation on why the formula is like that. THANK YOU Formula: = Inventory related-expense held last year x (1- Holding Cost %) = $1,886,000 x (1-12.0192%) = $1,886,000 x 0.8798 = $1,659,317.31

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Inventory held last year            
     Total inventory            $2,327,000
     Inventory-related expense            $1,886,000
Inventory held previous year            
     Total inventory            2,119,000
     Inventory-related expense            1,861,000

EXPLAIN THE COMPUTATION FOR FIXED HOLDING COST when the holding cost % is 12.019%

*ANSWER is given, we need the explanation on why the formula is like that. THANK YOU

Formula:

= Inventory related-expense held last year x (1- Holding Cost %)

= $1,886,000 x (1-12.0192%)

= $1,886,000 x 0.8798

= $1,659,317.31

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