The annual relevant carrying costs of inventory consist of incremental costs plus the opportunity cost of capital.

Name: The annual relevant carrying costs of inventory consist of incremental costs plus the opportunity cost of capital.
Brand: Quizplus
Rating: 5.0 (33 reviews)

Question

Quizplus · Accepted Answer

The statement is true. Relevant carrying costs include both incremental costs (such as storage, handling, and insurance) as well as the opportunity cost of capital tied up in inventory (i.e. the amount of money that could have been invested elsewhere).

The Annual Relevant Carrying Costs of Inventory Consist of Incremental