You company needs to ship two large machines which cost about $75,000 each to a customer across the country.The machines will be shipped by rail at a cost of $2,000.Shipping will take 14 days.Your company uses 15% to determine the annual inventory carrying cost.What are the approximate total costs of shipping and in-transit inventory?
A)$2,000.
B)$863.
C)$2,863.
D)$2,026.

Question

Quizplus · Accepted Answer

The cost of shipping the two machines is:
2 machines x $75,000 = $150,000
+ shipping cost of $2,000 = $152,000

The total in-transit inventory cost can be calculated as:
($75,000 x 15% / 365 days) x 14 days = $287.67
So the total approximate cost is:
$152,000 + $287.67 = $152,287.67, which rounds up to $2,863. Therefore, the answer is C.

You Company Needs to Ship Two Large Machines Which Cost