Which cost should reflect the incremental change in space cost due to changing cycle inventory?
A)Cost of capital
B)Obsolescence (spoilage)cost
C)Handling cost
D)Occupancy cost

Question

Quizplus · Accepted Answer

Occupancy cost is the cost associated with holding or occupying space, including rent, utilities, and taxes. As cycle inventory increases, the space required to hold the inventory also increases, leading to a higher occupancy cost. Therefore, the incremental change in space cost due to changing cycle inventory should be reflected in the occupancy cost.

Which Cost Should Reflect the Incremental Change in Space Cost