Reference no: EM132867121

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 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%.