A Company Keeps 20 Days of Materials Inventory on Hand

question 88

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.What are the non-value-added costs for the company?

• A)$80,000
• B)$40,000
• C)$30,000
• D)$20,000