Assume that ABC Power Tools assembles industrial tools and handheld tools for the construction industry. Item 1 is a heavy-duty band saw that is assembled at the plant and shipped to an ABC distribution center for storage, waiting for an order to be placed. The table below summarizes the cost of holding Item 1 in storage for a one-year time period.

Cost Category Cost $

COGS 315

Inbound Freight 25

Labor/unit 10

Labor/month 0.5

Space/unit/month 1.5

Insurance/unit/year 1.5

Interest/unit/year. 15%

Taxes/year. 2%

Loss and damage/year. 1%

Obsolescene/year. 1%