Question
Calculate the inventory carrying cost percentage given the following annual information : Finished goods inventory is $35 million valued at full manufactured cost. The variable
Calculate the inventory carrying cost percentage given the following annual information:
Finished goods inventory is $35 million valued at full manufactured cost.
The variable transportation cost incurred to move the inventory from plants to warehouse locations close to customers is $2 million.
Personal property taxes paid on inventory is approximately $210,000.
Insurance coverage to protect against loss of inventory is $140,000.
Storage charges at public warehouses totaled $800,000.
Variable private storage in plant warehouses is considered to be negligible.
Obsolescence is $80,000.
Shrinkage (merma) is $100,000.
Damage related to inventory storage is $30,000.
Transportation cost associated to the relocation of field inventory to avoid obsolescence is considered to be negligible.
The opportunity cost is considered to be 30%.
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