When an order is placed for an item that is manufactured internally within a company, ordering costs consist primarily of ____.
A) storage and handling costs
B) deterioration costs
C) production setup costs
D) carrying costs

Question

Quizplus · Accepted Answer

When an order is placed for an item that is manufactured internally within a company, the ordering costs primarily consist of production setup costs, which include the cost of preparing the production process, such as obtaining raw materials, setting up machines, and training employees. Storage and handling costs, deterioration costs, and carrying costs are more closely associated with inventory management and holding costs.

When an Order Is Placed for an Item That Is