The Carrying Cost of Inventory Should Include All of the Following

question 153

Multiple Choice

The carrying cost of inventory should include all of the following costs except

• A)purchase costs.
• B)sales taxes and transportation costs paid by the purchaser.
• C)general administrative costs associated with the purchase of inventory.
• D)insurance and storage costs.

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Definitions:

Additional Costs

Are extra costs that may not have been initially accounted for or that occur beyond the expected costs of production or operations.

Additional Benefits

The perks or supplementary advantages that come in addition to the primary benefits of a product, service, or policy.

Marginal Analysis

Marginal Analysis is an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity.

Relevant Costs

Only those costs that will be affected by a decision or action and therefore should be considered in decision-making.