What is the annual holding cost per unit for goat cheese?

• A. $9.50
• B. $12.96
• C. $15.00
• D. $21.50

Answer: (B)

The main idea is to determine what it costs to keep one unit of inventory in stock for an entire year. That per-unit annual carrying cost is found by multiplying the item's unit cost by the annual carrying (holding) rate. In this goat cheese problem, the data give you both the unit cost and the carrying rate, and their product comes out to 12.96. That is why the correct choice is the 12.96 value.

So, annual holding cost per unit = unit cost × annual carrying rate. If you plug in the problem’s numbers, you should arrive at 12.96. The other options would require different unit costs or carrying rates, which don’t match the given data.