# How do You Calculate Inventory Holding Costs?

## Answer

Inventory holding costs are calculated by determining the actual cost of the inventory. The cost of inventory is multiplied by the investment value as if you had not bought the inventory and invested the money.
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How to Calculate Inventory Holding Costs
Inventory holding costs are costs a firm has when keeping inventory. Companies often try to reduce the amount of inventory they have on hand to reduce inventory holding costs. The less time inventory is on hand, the less storage costs for the company and... More »
Difficulty: Moderately Easy
Source: www.ehow.com
To calculate inventory holding costs, determine the total amount spent in regards to the storage and handling of inventory. Then determine the total amount of obsolete inventory and spoilage. The total amount spent in storage and handling less obsolete and spoiled inventory is the inventory holding cost.
Q&A Related to "How do You Calculate Inventory Holding Costs?"
 1. Sort through the receipts relating to inventory. Find any receipt that has to do with storage of inventory, such as storage rental and handling costs. This can also include any http://www.ehow.com/how_7233049_calculate-inventor...
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