In this ques, while calculating holding cost, they have taken the average qty… Why?
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We have considered the average qty because at any given point of time we will be holding Avg Qty.
At the start of a new colour, our stock holding will be zero and at the completion of a particular, we will be holding the entire stock of that batch (because we sent a particular batch in one lot). Hence, we take the average of the Qty.
Hope you got that.
Yes.. Thankyou!!