A computer company’s yearly inventorycost is 54% (which accounts for the cost of capital for financingthe inventory, warehouse space, and the cost of obsolescence). Lastyear the company averaged $375 million in inventory the cost ofgoods sold was $44 billion.What is the company’s totalinventory cost for the year (in million $s)? (Round to nearestinteger)
Expert Answer
Given that, Cost of Goods sold = $44 billion
Given that, Yearly inventory cost = 54% of COGS = 0.54
Inventory cost for last year = $44 billion x 0.54 = $23.76Billion