Which of the Following Costs Is a Relevant Inventory Carrying

question 127

Multiple Choice

Which of the following costs is a relevant inventory carrying cost of carrying inventory?

• 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 shrinkage.

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Definitions:

Human Motivation

The study of what drives individuals to initiate, direct, and sustain behaviors to satisfy their needs and achieve goals.

Validity Effect

The tendency of people to believe that a statement is true or valid simply because it has been repeated many times.

Familiarity Effect

A psychological phenomenon whereby people tend to develop a preference for things merely because they are familiar with them.

Cognitive Dissonance

The state of having inconsistent thoughts, beliefs, or attitudes, especially as relating to behavioral decisions and attitude change.