Asked by Pankaj Kumar on May 03, 2024
Verified
Suppose that a product's value is $1000. The manufacturer experiences a holding cost of 2.5% per month. The firm ships the product across country by truck, and it arrives six days later. The shipping cost is $80 per unit. What is the holding cost on each unit shipped? (Assume 30 days per month.)
A) $0.83
B) $5.00
C) $0.07
D) $0.40
E) $150.00
Holding Cost
The expenses associated with storing unsold goods or materials, including warehousing, insurance, depreciation, and opportunity cost.
Shipping Cost
The expense incurred to transport goods from one location to another.
- Determine the holding cost for transported merchandise utilizing the percentage rate and its value.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
B
Explanation :
The holding cost per month is 2.5% of $1000, which is $25. For six days (1/5 of a month assuming 30 days per month), the holding cost is $25 * (6/30) = $5.00.
Learning Objectives
- Determine the holding cost for transported merchandise utilizing the percentage rate and its value.