Your Company Keeps 15 Days of Materials Inventory on Hand

question 53

Multiple Choice

Your company keeps 15 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $5,000 per day. A competitor keeps 12 days of inventory on hand, and the competitor's carrying costs average $3,000 per day. The value-added costs are

• A)$0.
• B)$5,000.
• C)$30,000.
• D)$75,000.

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Definitions:

Subduction-Derived Magma

Magma that is generated in subduction zones when one tectonic plate moves under another, melting due to high pressure and temperature.

Continental Crust

The layer of igneous, sedimentary, and metamorphic rocks that forms the continents and the areas of shallow seabed close to their shores.

Felsic Composition

Rocks rich in silica and aluminum, characterized by lighter minerals like quartz and feldspar.

Decompression

The reduction in pressure exerted on a material, often leading to changes in its physical state or phase.