Question

calculate the inventory holding cost ($/unit) of a dress based on information provided in the table, if the cost of goods sold for a dress is $35 per unit

Answer 1

To calculate the inventory holding cost ($/unit) of a dress, subtract the cost of goods sold from the total cost. In this case, the total cost is $40 per unit with a cost of goods sold of $35 per unit, resulting in an inventory holding cost of $5 per unit.

Step-by-step explanation:

The inventory holding cost can be calculated by subtracting the cost of goods sold from the total cost. In this case, the cost of goods sold is $35 per unit. Let's assume the total cost for the dress is $X per unit. So, the equation to calculate inventory holding cost ($/unit) would be:

Inventory Holding Cost ($/unit) = Total Cost ($/unit) - Cost of Goods Sold ($/unit)

We can substitute the values provided in the table to find the total cost. From the given information, we know that at an output quantity of 5 units, the firm experiences losses (negative profits) of $5. Therefore, we can set up the equation as:

$X - $35 = -$5

Solving for $X, we get:

$X = $35 - (-$5)

$X = $40

Therefore, the inventory holding cost per unit for the dress would be $40 - $35 = $5.