Mendelsohn Company Keeps 20 Days of Materials Inventory on Hand

question 95

Multiple Choice

Mendelsohn company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $4,000 per day. Bach, Inc., a competitor, keeps 10 days of inventory on hand, and the competitor's carrying costs average $2,000 per day.
The non-value-added costs for the company are

• A)$-0-.
• B)$40,000.
• C)$20,000.
• D)$80,000.

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Definitions:

Barbiturates

A class of drugs that are used as sedatives and hypnotics, they can be highly addictive and have been largely replaced by safer alternatives.

Opiates

Opium and its derivatives, such as morphine and heroin; they depress neural activity, temporarily lessening pain and anxiety.

Heroin

A powerful and highly addictive opioid drug derived from morphine, used illicitly as a narcotic producing euphoria.

Methamphetamine

A powerful, highly addictive stimulant that affects the central nervous system and is known for its abuse potential.