Here's the question:
'each unit is bought in at a cost of $2.24 from supplier.....
The total holding cost is 10% per annum of the value of inventory held.'
How do you find the total holding cost?
(i.e. what is the value of inventory held?)
I know you use Ch×Q/2 to find total holding cost. just not sure why value of inventory is related to the purchase cost of each unit.
Kind regards,
Hwan
Ask the Tutor ACCA MA
Total Annual Cost - Holding cost question
7y ago#1Because the question actually says "the holding cost is 10% of the value of the inventory".
I explain this (and why) in my free lectures. The lectures are a complete free course for Paper F2 (MA) and cover everything needed to be able to pass the exam well.
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