Question

A company usually holds 170 pounds of wax in its warehouse. The company uses 46 pounds of wax per day and it takes 6 days for wax purchased from the supplier to arrive. The holding cost for wax is $0.79 per pound per day.

What is the company's average holding cost (per pound for wax)?

Answer 1

The company's average holding cost per pound for wax is $0.485.

Step-by-step explanation:

To calculate the average holding cost per pound for wax, we need to consider the amount of wax held in the warehouse, the rate of wax usage, and the holding cost per pound per day.

First, calculate the total amount of wax used in 6 days: 46 pounds/day * 6 days = 276 pounds.

Then, calculate the average holding cost per pound: Total holding cost / Total amount of wax used = ($0.79/pound/day * 170 pounds)/(276 pounds) = $0.485/pound/day.