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.What are the non-value-added costs?
A)$100,000
B)$10,000
C)$5,000
D)$250

Question

Quizplus · Accepted Answer

The non-value-added costs in this case refer to the carrying costs of the finished goods inventory. Since the question states that the carrying costs average $5,000 per day, the total non-value-added costs over 20 days would be $100,000 (20 days x $5,000 per day). Therefore, the correct choice is A.

A Company Has 20 Days of Finished Goods Inventory on Hand