Question

You company needs to ship large piece of construction equipment which costs about $500,000 to a customer across the country. shipping by rail costs $3,000 and will take 8 days. your company uses 20 % to determine the annual inventory carrying cost. what are the approximate total costs of shipping and in-transit inventory? question 1 options:

a.$3,000.


b.$2,192.


c.$10,000.


d.$5,192.

Answer 1

The total costs of shipping and in-transit inventory are of $5,192. The right answer is d

Step-by-step explanation:

In order to calculate the approximate total costs of shipping and in-transit inventory we would have to use the following formula:

Total cost=shipping cost+in-transit inventory cost

in transit invenory cost=20%×$500,000×(8/365)

in transit invenory cost=$2,191.78

Therefore, Total cost=$3,000+$2,191.78

Total cost=$5,192

The total costs of shipping and in-transit inventory are of $5,192