What would be the total on-hand average inventory holding cost for the four quarters?

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25-08-2022
Social Studies

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What would be the total on-hand average inventory holding cost for the four quarters?

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MubeenaD MubeenaD · Answer 1 · 2022-09-03T11:32:58-04:00

Carrying expenses are one of the major issues that firms have with inventory management. These expenses include item replacement, shrinkage, depreciation, labor, shipping, handling, insurance, and taxes.

They occur when goods are stored on shelves at a warehouse, a distribution center, or a store. Another factor is opportunity cost, or the investment opportunities a company must forgo because its resources are dedicated to inventory.

As an item is kept in storage for a longer period of time before being sold, holding costs, sometimes referred to as inventory carrying costs, can increase from 20% to 30% of the overall inventory value.

They are affected by the type of business and the industry. Depending on the amount of goods sold, the rate of inventory turnover, and the location, the ratio may differ.

To learn more about Carrying Expenses here

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