Which of the Following Costs Is a Relevant Inventory Carrying

question 19

Multiple Choice

Which of the following costs is a relevant inventory carrying cost under EOQ decision model?

• A) The lost contribution margin on future sales forgone as a result of customer dissatisfaction in product quality.
• B) The lost contribution margin on sales forgone because of the shortage of inventory.
• C) The costs of storage space owned that cannot be used for other profitable purposes when inventories decrease.
• D) The costs of receiving and inspecting inventory and moving the inventories to the warehouses.

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Definitions:

Current Maturities

The portion of a company's long-term debt that is due to be paid within the upcoming year.

Property Tax

Taxes levied by local governments based on the estimated value of property, including real estate and personal property.

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Prepaid Property Tax

An expense that has been paid in advance for property taxes, recognized as a current asset until the period it covers arrives.