In Making Any Decision That Affects Inventory Size, Which of the Following

question 71

Multiple Choice

In making any decision that affects inventory size, which of the following costs do not need to be considered?

• A) Holding costs
• B) Setup costs
• C) Ordering costs
• D) Fixed costs
• E) Shortage costs

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Definitions:

Standard Costs

Preset costs for delivering a product or service under normal conditions, used as benchmarks to measure actual performance.

Average Cost

Average cost is the total cost of producing a certain quantity of goods divided by that quantity, calculating the cost per unit of goods produced.

Raw Materials Inventory

The total cost of all the raw materials that are currently held by a company and intended for production.

Standard Costs

Pre-determined or estimated costs of products, labor, and materials or overhead for a particular period under normal conditions.