Bonus Question. Item X is a standard item stocked in a company's inventory ofcomponent parts. Each year the firm, on a random basis, uses about 2,000 of item X,which costs $25 each. Storage costs, which include insurance and cost of capital,amount to $5 per unit of average inventory. Every time an order is placed for moreitem X, it costs $10.What is the annual cost for storing item X? (Round your answer to 2 decimal places)$224.50$226.50$220.50$222.50

Step 1 Storing cost is a holding costs accost that is incurred by the entity to carry the stock in…

Answered: What is the annual cost for storing…

Business

Accounting

What is the annual cost for storing item X? (Round your answer to 2 decimal places) $224.50 $226.50 O $220.50 $222.50

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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Item X is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 1,700 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $4 per unit of average inventory. Every time an order is placed for more of item X, it costs $22.a. Whenever item X is ordered, what should the order size be? (Round your answer to the nearest whole number.) b. What is the annual cost for ordering item X? (Round your answer to 2 decimal places. Round your intermediate calculation.)c. What is the annual cost for storing item X? (Round your answer to 2 decimal places. Round your intermediate calculation.)
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