Which of the Following Is NOT a Kind of Cost

question 105

Multiple Choice

Which of the following is NOT a kind of cost associated with maintaining an inventory?

• A) ordering
• B) stockout
• C) holding
• D) amortization
• E) setup

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Definitions:

Absorption Costing

A financial accounting approach that encompasses all expenses of manufacturing, like direct materials, direct labor, along with variable and fixed overhead costs, into the pricing of a product.

Product Cost

The total expense incurred to produce a product, including direct materials, direct labor, and overhead costs.

Incremental Loss

The additional loss incurred from producing one extra unit of a product or service beyond the break-even point.

Special Order

An order for a product that is made to a customer's specifications, differing from regular stock products.