Big Woods is a lumber firm that sells plywood sheets to local builders. If the annual holding cost of a sheet of plywood is $8 and the managers of Big Woods order 700 sheets of plywood, what is the total annual carrying costs of the inventory?

Question

Quizplus · Accepted Answer

The formula for calculating the total annual carrying cost of inventory is:
Total Annual Carrying Cost = Annual Holding Cost per Unit x Number of Units Ordered/Produced
Substituting the values given in the problem, we get:
Total Annual Carrying Cost = $8 x 700 = $5,600
Therefore, the answer is choice letter A, which is $2,800. However, this is not a valid answer as it is half of the actual cost. The correct answer is $5,600.

Big Woods Is a Lumber Firm That Sells Plywood Sheets