Using the table below, calculate the holding inventory costs for all four periods using both average inventory and end inventory values.The holding cost per period per unit is $200.The sequence of cost is (average inventory, end inventory).
$$\begin{array} { | c | c | c | c | c | }
\hline \text { Periods } & 1 & 2 & 3 & 4 \
\hline \text { Usage } & 100 & 120 & 50 & 80 \
\hline \text { End Inventory } & 10 & 30 & 70 & 30 \
\hline
\end{array}$$
A) ($63,000, $78,500)
B) ($57,400, $48,000)
C) ($23,000, $28,000)
D) ($63,000, $28,000)

Question

Using the table below, calculate the holding inventory costs for all four periods using both average inventory and end inventory values.The holding cost per period per unit is $200.The sequence of cost is (average inventory, end inventory).
$$\begin{array} { | c | c | c | c | c | } 
\hline \text { Periods } & 1 & 2 & 3 & 4 \
\hline \text { Usage } & 100 & 120 & 50 & 80 \
\hline \text { End Inventory } & 10 & 30 & 70 & 30 \
\hline
\end{array}$$
A) ($63,000, $78,500)
B) ($57,400, $48,000)
C) ($23,000, $28,000)
D) ($63,000, $28,000)

Quizplus · Accepted Answer

To calculate the holding inventory costs using both average inventory and end inventory values, we first need to determine the beginning inventory for each period, which is the end inventory of the previous period (with the first period assumed to have a beginning inventory of 0 if not provided). Then, we calculate the average inventory for each period as $(\text{Beginning Inventory} + \text{End Inventory}) / 2$. The holding cost is then calculated by multiplying the average or end inventory by the holding cost per unit.1. Period 1: Beginning Inventory = 0, End Inventory = 10   - Average Inventory = (0 + 10) / 2 = 5   - Holding Cost (Average) = 5 * $200 = $1,000   - Holding Cost (End) = 10 * $200 = $2,0002. Period 2: Beginning Inventory = 10, End Inventory = 30   - Average Inventory = (10 + 30) / 2 = 20   - Holding Cost (Average) = 20 * $200 = $4,000   - Holding Cost (End) = 30 * $200 = $6,0003. Period 3: Beginning Inventory = 30, End Inventory = 70   - Average Inventory = (30 + 70) / 2 = 50   - Holding Cost (Average) = 50 * $200 = $10,000   - Holding Cost (End) = 70 * $200 = $14,0004. Period 4: Beginning Inventory = 70, End Inventory = 30   - Average Inventory = (70 + 30) / 2 = 50   - Holding Cost (Average) = 50 * $200 = $10,000   - Holding Cost (End) = 30 * $200 = $6,000Total Holding Cost (Average Inventory) = $1,000 + $4,000 + $10,000 + $10,000 = $25,000Total Holding Cost (End Inventory) = $2,000 + $6,000 + $14,000 + $6,000 = $28,000However, the correct calculation for the total holding cost using average inventory values seems to have been misunderstood in the initial explanation. The correct approach to find the total holding costs for all periods using average inventory values should consider the sum of the individual holding costs for each period based on the calculated average inventories. The mistake was in the total calculation for the average inventory holding costs, which should correctly add up based on the given options and the correct calculation method. Given the options, none directly match the recalculated total for average inventory holding costs, indicating a mistake in the calculation process. The correct total for average inventory holding costs, based on the method described, should align with the options provided, suggesting a need to reevaluate the calculation or the interpretation of the options. The provided answer choice D ($63,000, $28,000) includes a correct component for the end inventory holding costs but incorrectly states the total for average inventory holding costs based on the calculation method described.

Using the Table Below, Calculate the Holding Inventory Costs for All