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inventory carrying costs smy corporation produces 60 000 videophones per year the co 666744

Inventory carrying costs SMY Corporation produces 60,000 videophones per year. The company estimates its direct material costs for the videophone to be $300 per unit and its conversion (direct labor plus support) costs to be$400 per unit. Annual inventory carrying costs, not included in these costs, are estimated to be 10%. SMY’s average inventory levels are estimated as follows:

Direct material

2 months of production

Work in process (100% complete for materials and 50% for conversion)

2 months of production

Finished goods

1 month of production

Compute the annual inventory carrying costs for SMY Corporation.

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