Which of the Following Statements Is True of Relevant Inventory

question 50

Multiple Choice

Which of the following statements is true of relevant inventory costs?

• A) The salaries paid to clerks, stock keepers, and materials handlers are relevant carrying costs if they are unaffected by changes in inventory levels.
• B) The costs of expediting an order from a supplier are relevant incremental costs of stockouts.
• C) Warehouse rent, warehouse workers' salaries and costs of insurance, that change with the quantity of inventory held are irrelevant carrying costs.
• D) Those ordering costs that change with the number of orders placed are irrelevant ordering costs.

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Definitions:

Income Ratios

Financial metrics that examine a company's income or profit relative to sales, assets, equity, or other financial metrics, providing insight into the efficiency and profitability of the company.

Capital Balances

Reflects the amount of capital that each partner or shareholder has contributed to a partnership or corporation, or their ownership stake.

Partners' Capital Statement

A financial statement showing the changes in each partner's capital account of a partnership during a specific period.

Partnership Expenses

Costs incurred by a partnership in the course of its business activities, which are shared by the partners.