A Company Keeps 20 Days of Materials Inventory on Hand

question 3

Multiple Choice

A company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $4,000 per day. A competitor keeps 10 days of inventory on hand, and the competitor’s carrying costs average $2,000 per day.
-Refer to the figure.Moulding costs total $20,000.What are the value-added costs?

• A)$75,000
• B)$30,000
• C)$20,000
• D)$5,000

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