Your Company Keeps 15 Days of Materials Inventory on Hand

question 41

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 non-value-added costs would be

• A) $-0-.
• B) $75,000.
• C) $30,000.
• D) $80,000.

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Definitions:

Zero-Coupon Bond

A bond that is issued at a discount and does not pay annual interest but is redeemed at its face value at maturity.

Deep Discount

The sale of an asset or product at a price significantly below its usual or intrinsic value.

Coupon Payments

Periodic interest payments made to bondholders, typically on a semi-annual basis, based on the coupon rate of the bond.

Municipal

Relating to a city or town or its governing body.