Which of These Is a Shortage Cost

question 98

Multiple Choice

Which of these is a shortage cost?

• A)Restocking cost
• B)Opportunity cost of capital
• C)Inventory obsolescence
• D)Insurance cost
• E)Inventory theft

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Definitions:

Inventory Level

The quantity of goods or materials on hand at any given time within a business.

Inventory Turnover

A ratio that measures how many times a company's inventory is sold and replaced over a specific period, highlighting the efficiency of inventory management.

FIFO

A method used in accounting to assign the cost of goods sold to the earliest purchased items in inventory, leading to different inventory value and profit measure from other methods.

Net Income

The total profit of a company after all revenues, expenses, and taxes have been deducted.