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:

Intrinsic Motivation

Motivation driven by an interest or enjoyment in the task itself, rather than relying on external pressure or reward.

Inherent Motivation

Internal drive to perform actions for their own sake, due to personal satisfaction or interest.

Extrinsic Motivation

Motivation driven by external rewards such as money, grades, or praise.

Seniority-Based Pay

A compensation system where an employee's wage or salary is determined by their length of service in the company.