Problem 7-3 The following table contains data about the inventory for five items
ID: 326716 • Letter: P
Question
Problem 7-3 The following table contains data about the inventory for five items and its unit cost at Jones Corporation. Average Unit Inventory 355,000 72,000 113,000 405,000 77,000 Unit Cost $15.00 $52.00 S 4.00 S 8.00 S 1.00 Item # Suppose Jones Corporation determined that its annual inventory carrying cost 18 percent. Compute the dollar values for the information in the above table, determine the annual inventory carrying cost for each tem, and the total annual inventory carrying cost. Item# Inventory Cost TotalExplanation / Answer
Annual inventory carrying cost = 18%
Annual Inventory carrying cost = (Average Unit Inventory) * (Unit Cost) * (Annual Inventory Cost percentage =0.18)
Item #
Average Unit Inventory
Unit Cost
Annual inventory carrying cost
1
355000
$ 15.00
$ 958,500.00
2
72000
$ 52.00
$ 673,920.00
3
113000
$ 4.00
$ 81,360.00
4
405000
$ 8.00
$ 583,200.00
5
77000
$ 1.00
$ 13,860.00
Total
$ 2,310,840.00
Item #
Average Unit Inventory
Unit Cost
Annual inventory carrying cost
1
355000
$ 15.00
$ 958,500.00
2
72000
$ 52.00
$ 673,920.00
3
113000
$ 4.00
$ 81,360.00
4
405000
$ 8.00
$ 583,200.00
5
77000
$ 1.00
$ 13,860.00
Total
$ 2,310,840.00