Question: ( Major U . S . Retailers ) The following table shows financial data ( year 2 0 0 4 ) for Costco Wholesale and

(Major U.S. Retailers) The following table shows financial data (year 2004) for Costco
Wholesale and Walmart, two major U.S. retailers.
McDonalds Wendys
Inventory $129.4 $54.4
Revenue 17,140.53,148.9
Cost of goods sold 11,943.71,634.6
Gross profit 5,196.81,514.4
Assume that both companies have an average annual holding cost rate of 30 percent (i.e.,
it costs both retailers $3 to hold an item that they procured for $10 for one entire year).How much lower is, on average, the inventory cost for Costco compared to Walmart of
a household cleaner valued at $5 COGS? Assume that the unit cost of the household
cleaner is the same for both companies and that the price and the inventory turns of an
item are independent. [2.4]

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