Which of the Following Actions Is Most Likely to Reduce

question 192

Multiple Choice

Which of the following actions is most likely to reduce inventory carrying costs?

• A) Utilize ABC classification
• B) Standardize the items in inventory
• C) Set minimum inventory levels
• D) Initiate a vendor-managed inventory (VMI) program

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Definitions:

Extend Its Useful Life

The process of prolonging the period over which an asset can productively be used, often through maintenance or improvements.

Functional Depreciation

The decrease in the usefulness or value of an asset due to advancements in technology or changes in market demands, rather than physical wear and tear.

Fixed Asset

Long-term tangible assets that a company uses in its operations to generate income, such as buildings, machinery, and vehicles, which are not typically sold in the course of business.

Interest on Construction Loan

The interest that accrues on a loan taken out to finance the construction of a building or other project, traditionally capitalized and added to the project's cost base.