RST Corporation produces 70,000 cell phones per year. The company estimates its direct material costs for the cell phone to be $400 per unit and its conversion costs (direct labor plus support) to be $500 per unit. Annual inventory carrying costs, not included in these costs are estimated to be 10%. 14. RST's average inventory levels are estimated as follows: Direct material Work in process (100% complete for materials and (50% complete for conversion) Finished goods 2 months of production 2 months of production 1 month of production What is RST's annual inventory carrying costs? A) $1,500,000 B) $1,650,000 C) $1,750,000 D) $2,000,000
RST Corporation produces 70,000 cell phones per year. The company estimates its direct material costs for the cell phone to be $400 per unit and its conversion costs (direct labor plus support) to be $500 per unit. Annual inventory carrying costs, not included in these costs are estimated to be 10%. 14. RST's average inventory levels are estimated as follows: Direct material Work in process (100% complete for materials and (50% complete for conversion) Finished goods 2 months of production 2 months of production 1 month of production What is RST's annual inventory carrying costs? A) $1,500,000 B) $1,650,000 C) $1,750,000 D) $2,000,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![RST Corporation produces 70,000 cell phones per year. The company estimates its direct
material costs for the cell phone to be $400 per unit and its conversion costs (direct labor plus
support) to be $500 per unit. Annual inventory carrying costs, not included in these costs are
estimated to be 10%.
14.
RST's average inventory levels are estimated as follows:
Direct material
Work in process
(100% complete for materials and
(50% complete for conversion)
Finished goods
2 months of production
2 months of production
1 month of production
What is RST's annual inventory carrying costs?
A) $1,500,000
B) $1,650,000
C) $1,750,000
D) $2,000,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fba2b542f-041c-4560-a5c7-80804b211a9a%2Fad46cfe1-57c6-42c7-920f-3f196c5beee3%2F23esi9q_processed.jpeg&w=3840&q=75)
Transcribed Image Text:RST Corporation produces 70,000 cell phones per year. The company estimates its direct
material costs for the cell phone to be $400 per unit and its conversion costs (direct labor plus
support) to be $500 per unit. Annual inventory carrying costs, not included in these costs are
estimated to be 10%.
14.
RST's average inventory levels are estimated as follows:
Direct material
Work in process
(100% complete for materials and
(50% complete for conversion)
Finished goods
2 months of production
2 months of production
1 month of production
What is RST's annual inventory carrying costs?
A) $1,500,000
B) $1,650,000
C) $1,750,000
D) $2,000,000
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