The calculation below for a sample distribution company illustrates the need to account for the impact of financing inventory with debt and, in turn, to apply the correct cost of capital in estimating the inventory carrying cost
But "it's imperative to also use activity- or process-based costing to identify costs for such things as inventory carrying costs
and order processing," says Marc Shingles, customer profitability solution/practice leader for Cap Gemini Ernst & Young.
Using the sequential method, credit investigation policy is formulated to balance the benefits that each level of investigation confers in terms of reductions in bad debt and carrying cost
versus the costs of that level of investigation.
That is, the additional carrying cost
for inventory is the current tax cost (including both regular and alternative minimum tax) less the present value of the future tax savings in periods when the delayed deduction becomes a current deduction.
A second factor that I explored related to the increased carrying cost
of a cooperative loan over a condominium.
Inventory carrying costs
in the United States rose a whopping 13.
7 percent because of increased inventory carrying costs
, according to Dean Rappaport, executive vice president and chief financial officer.
Record inventory carrying costs
and rising transportation costs accounted for the increase.
We predict that renovated apartments will continue to attract more interest, and that the sellers of properties needing renovation will have to account for both renovation and interim carrying costs
to sell promptly.
The forecast of moderating interest rates, combined with slowing house price increases, will stabilize 1991 mortgage carrying costs
Including the rent from the third floor apartment, it is estimated that the monthly carrying costs
to the owner for both the apartment and retail space will be $1,055.