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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). Periods 1 2 3 4 Usage 100 120 50 80 End Inventory 10 30 70 30

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Answer:

Holding cost = Ending inventory for period * Holding cost per unit

Period 1 holding cost                                     Period 2

= 10 * 200                                                       = 30 * 200

= $2,000                                                        = $6,000

Period 3                                                          Period 4

= 70 * 200                                                       = 30 * 200

= $14,000                                                        = $6,000

Total holding cost:

= 2,000 + 6,000 + 14,000 + 6,000

= $28,000

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