Evertz Metals Buys and Stockpiles Dolomite to Use in Its

question 79

Multiple Choice

Evertz Metals buys and stockpiles dolomite to use in its smelting processes.Before all this dolomite is used,however,they alter their smelting process so that calcite limestone is used instead.How is the inventory cost of the unused dolomite best categorized?

• A)an acquisition cost
• B)a carrying cost
• C)an order cost
• D)a holding cost
• E)a hidden cost

---

Definitions:

Operating Income

Earnings from a company's principal business activity, excluding expenses and revenues from non-operational sources.

Operating Income

A measure of a company's earning power from ongoing operations, equal to revenues minus operating expenses, but before taxes and interest.

Margin Of Safety

Indicates the possible decrease in sales that may occur before an operating loss results.

Variable Costs

Costs that change in proportion to the level of activity or production volume.