Purchase Solution

Formulas

Not what you're looking for?

Ask Custom Question

I need help with set-up, formulas, to calculate the problem.

---

1. I Carry rent trucks for moving and hauling. Each truck costs the company an average of $8,000, and the inventory of trucks varies monthly depending on the number that are rented out. During the first 8 months of last year, I Carry had the following ending inventory of trucks on hand:

MONTH NUMBER OF TRUCKS MONTH NUMBER OF TRUCKS
January 26 May 13
February 38 June 9
March 31 July 16
April 22 August 5

I Carry use a 20 percent annual interest rate to represent the cost of capital. Yearly costs of storage amount to 3 percent of the value of each truck, and the cost of liability insurance is 2 percent.

a. Determine the total handling cost incurred by I Carry during the period January to August. Assume for the purposes of your calculation that the holding cost incurred in a month is proportional to the inventory on hand at the end of the month.

b. Assuming that these 8 months are representative, estimate the average annual cost of holding trucks.

---

(Full problem also found in attached file)

Purchase this Solution

Purchase this Solution


Free BrainMass Quizzes
Learning Lean

This quiz will help you understand the basic concepts of Lean.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.