MENU
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
Suggested Answer: A
Get Premium CPIM Questions
as Interactive Web-Based Practice Test or PDF
Real Exam Format
Detailed Explanations
Instant Access
Get Your Practice Test
31 comments · newest first
GE
Geraldo
10 months ago
Just to clarify, that's $10 per unit for 500 units, so...
SH
Shawnee
10 months ago
I think it's definitely around $500!
JE
Jenise
10 months ago
Wait, are we sure about the calculations? Seems off.
NI
Nina
10 months ago
Totally! It's 20% of the average inventory value.
EF
Effie
11 months ago
The carrying cost is based on the average inventory, right?
RO
Rossana
11 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.
MI
Micheal
11 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.
LE
Lewis
11 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.
JO
Josephine
12 months ago
I think the carrying cost is based on the average inventory, but I'm not entirely sure how to calculate that.
AR
Aretha
12 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.
SE
Serina
12 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.
JE
Jeanice
1 year 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.
DA
Dana
1 year ago
This looks like a straightforward inventory carrying cost calculation. I'll need to use the formula and plug in the given values.
BA
Barb
1 year ago
So, the correct answer should be B) $550 then, as it takes into account all the relevant factors.
CA
Caren
1 year 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!
RU
Rueben
1 year ago
That's true, but in this case, the carrying cost is based on the SKU cost and the order quantity.
ME
Melina
1 year ago
But wouldn't the annual inventory carrying cost be affected by the order quantity and annual demand as well?
BA
Barb
1 year ago
I agree with Rueben, because carrying costs are 20% of the SKU cost multiplied by the average inventory level.
MA
Marica
1 year 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!
RO
Ronald
1 year ago
User2: I agree with User1, B) $550 seems correct.
PU
Pura
1 year ago
User1: I think the answer is B) $550.
FR
Francoise
1 year ago
D) $400, baby! That's the kind of number that makes my accountant heart sing. Time to celebrate with a victory dance!
JU
Junita
1 year 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?
MA
Margret
1 year ago
C) $450
AL
Alita
1 year ago
B) $550
PA
Pamella
1 year ago
A) $500
RU
Rueben
1 year ago
I think the answer is B) $550.
CA
Catarina
1 year 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!
LA
Lavonna
1 year ago
User 3: That's correct! So the annual inventory carrying cost would be $550. Good job!
AM
Amos
1 year ago
User 2: So for this SKU, it would be (500 / 2) * 0.20, right?
AA
Aaron
1 year ago
User 1: I think the formula for annual inventory carrying cost is (Order Quantity / 2) * Carrying Cost