Your Company Keeps 15 Days of Materials Inventory on Hand

question 53

Multiple Choice

Your company keeps 15 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $5,000 per day. A competitor keeps 12 days of inventory on hand, and the competitor's carrying costs average $3,000 per day. The value-added costs are

• A)$0.
• B)$5,000.
• C)$30,000.
• D)$75,000.

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Definitions:

Statutorily Assigned

Designated or assigned by law or statute in a formal manner.

Notice of Assignment

A formal notification indicating that a particular assignment of rights or interests has been made.

Vicarious Performance

A principle which allows one person to perform their obligations through another, typically in the context of employment or contractual duties.

Vicarious Performance

Vicarious performance refers to situations where a third party performs contractual duties on behalf of one of the original parties involved in the contract.