What Are the Two Major Costs Associated with Inventory

question 8

Multiple Choice

What are the two major costs associated with inventory?

• A)ordering costs and setup costs
• B)setup costs and stockout costs
• C)stockout costs and carrying cost
• D)ordering costs and carrying costs

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Definitions:

Total Sales Revenue

The total income generated from selling goods or services before any expenses are subtracted.

Selling Price

The amount of money for which a product or service is sold to the customer, including all applicable costs and markup.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs.

Break-Even Point

The financial point at which total costs and total revenue are equal, resulting in no net loss or gain.