Final answer:
To determine the monthly holding cost for the appliance store's washing machines, multiply the value of an individual machine by the total number of machines and the annual holding percentage, then divide the annual holding cost by 12 to get the monthly cost. The store's monthly holding cost is $180.00.
Step-by-step explanation:
The question asks us to calculate the monthly holding cost for an appliance store that has a 12% annual holding cost for its inventory of washing machines. With a monthly average inventory of 30 machines each valued at $500, the calculation is as follows:
First, we determine the annual holding cost by multiplying the total value of the inventory by the holding cost percentage:
$500 (value per machine) × 30 (number of machines) × 12% (annual holding cost percentage) = $18,000 × 0.12 = $2,160 (annual holding cost).
To find the monthly holding cost, we divide the annual holding cost by 12:
$2,160 (annual holding cost) ÷ 12 (months) = $180.00 (monthly holding cost).
Therefore, the appliance store's monthly holding cost for washing machines is $180.00.