A company has 20 days of finished goods inventory on hand to avoid stockouts. The carrying costs of the inventory average £5,000 per day. The nonvalue-added costs are
A) £100,000.
B) £10,000.
C) £5,000.
D) £250.

Question

Quizplus · Accepted Answer

The nonvalue-added costs are calculated by multiplying the daily carrying costs (£5,000) by the number of days of inventory on hand (20 days), resulting in £100,000.

A Company Has 20 Days of Finished Goods Inventory on Hand