For Inventory Carrying Costs,which of the Following Statements Is True

question 101

Multiple Choice

For inventory carrying costs,which of the following statements is true of the relevant opportunity cost of capital of inventory?

• A) It is the return received by investing capital in inventory rather than elsewhere.
• B) It is calculated as the per-unit costs of carrying inventory divided by the required rate of return .
• C) It is the return foregone by investing capital elsewhere rather than in inventory.
• D) It is calculated as the required rate of return multiplied by the per-unit costs of acquiring inventory.

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Definitions:

Mixed Costs

Costs comprising both constant and fluctuating elements, altering in aggregate with activity levels yet not in direct correlation.

Per Unit Basis

Calculations or measurements made by dividing the total by the number of units to find the amount corresponding to a single unit.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent and salaries.

Activity

An action or task that is part of a process or program, often contributing to achieving a goal or outcome.