APICS CPIM Exam - Topic 3 Question 114 Discussion

Actual exam question for APICS's CPIM exam

Question #: 114
Topic #: 3

[All CPIM Questions]

An SKU costing $10 is ordered in quantities of 500 units, annual demand is 5200 units, carrying costs are 20%, and the cost of placing an order is $50. Calculate annual inventory carrying cost

A$500

B$550

C$450

D$400

Show Suggested Answer

Suggested Answer: A

by Jacqueline at Jul 13, 2025, 09:40 PM

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Geraldo

2 months ago

Just to clarify, that's $10 per unit for 500 units, so...

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Shawnee

2 months ago

I think it's definitely around $500!

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Jenise

3 months ago

Wait, are we sure about the calculations? Seems off.

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Nina

3 months ago

Totally! It's 20% of the average inventory value.

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Effie

3 months ago

The carrying cost is based on the average inventory, right?

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Rossana

3 months ago

I feel like I might be overthinking this, but I think I need to find the average inventory first before calculating the carrying cost.

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Micheal

4 months ago

This seems similar to a practice question we did in class, where we had to find the carrying cost using the same method.

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Lewis

4 months ago

I remember something about multiplying the cost of the SKU by the carrying cost percentage, but I can't recall the exact formula.

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Josephine

4 months ago

I think the carrying cost is based on the average inventory, but I'm not entirely sure how to calculate that.

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Aretha

4 months ago

No problem, I've got this. I just need to remember the right formula and do the math carefully. I'm confident I can get the right answer.

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Serina

4 months ago

Okay, I think I've got this. I'll calculate the average inventory and then apply the carrying cost percentage to get the annual inventory carrying cost.

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Jeanice

5 months ago

Hmm, I'm a bit unsure about this one. I'll need to review the inventory cost formulas and make sure I'm applying them correctly.

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Dana

5 months ago

This looks like a straightforward inventory carrying cost calculation. I'll need to use the formula and plug in the given values.

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Barb

6 months ago

So, the correct answer should be B) $550 then, as it takes into account all the relevant factors.

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Caren

6 months ago

Alright, time to put on my best Sherlock Holmes impression and solve this mystery. B) $550 is the clear winner here. Elementary, my dear Watson!

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Rueben

7 months ago

That's true, but in this case, the carrying cost is based on the SKU cost and the order quantity.

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Melina

7 months ago

But wouldn't the annual inventory carrying cost be affected by the order quantity and annual demand as well?

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Barb

7 months ago

I agree with Rueben, because carrying costs are 20% of the SKU cost multiplied by the average inventory level.

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Marica

7 months ago

I'm feeling like a rebel today, so I'm going with A) $500. Who needs to follow the rules when you can just make up your own numbers, right? Shh, don't tell the instructor!

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Ronald

6 months ago

User2: I agree with User1, B) $550 seems correct.

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Pura

6 months ago

User1: I think the answer is B) $550.

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Francoise

7 months ago

D) $400, baby! That's the kind of number that makes my accountant heart sing. Time to celebrate with a victory dance!

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Junita

7 months ago

C) $450 seems like the way to go. I mean, who doesn't love a good discount on their annual inventory carrying cost, am I right?

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Margret

5 months ago

C) $450

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Alita

5 months ago

B) $550

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Pamella

6 months ago

A) $500

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Rueben

7 months ago

I think the answer is B) $550.

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Catarina

8 months ago

Alright, let's see... 500 units per order, 20% carrying cost, and $50 per order. Hmm, I'm going with B) $550. Gotta love those inventory calculations!

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Lavonna

7 months ago

User 3: That's correct! So the annual inventory carrying cost would be $550. Good job!

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Amos

7 months ago

User 2: So for this SKU, it would be (500 / 2) * 0.20, right?

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Aaron

7 months ago

User 1: I think the formula for annual inventory carrying cost is (Order Quantity / 2) * Carrying Cost

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