SMY Corporation produces 60,000 videophones per year. The company estimates its direct material costs for the videophone

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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 $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 converstion) 2 month of production
Finished goods 1 month of production
Compute the annual inventory carrying costs for SMY Corporation.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Management Accounting Information for Decision-Making and Strategy Execution

ISBN: 978-0137024971

6th Edition

Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young

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