The Total Cost of Granting Credit Has Two Components

question 365

Multiple Choice

The total cost of granting credit has two components. ________ are the costs of lost sales incurred when credit is not granted and are inversely related to the amount of credit extended. ________ are the cash flows that are incurred when credit is granted and are positively related to the amount of credit extended.

• A) Stockout costs; Opportunity costs.
• B) Carrying costs; Opportunity costs.
• C) Opportunity costs; Interest costs.
• D) Opportunity costs; Carrying costs.
• E) Sales costs; Carrying costs.

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