Which of the following statements is true of relevant inventory costs?
A) The salaries paid to clerks, stock keepers, and materials handlers are relevant carrying costs if they are unaffected by changes in inventory levels.
B) The costs of expediting an order from a supplier are relevant incremental costs of stockouts.
C) Warehouse rent, warehouse workers' salaries and costs of insurance, that change with the quantity of inventory held are irrelevant carrying costs.
D) Those ordering costs that change with the number of orders placed are irrelevant ordering costs.

Question

Quizplus · Accepted Answer

Relevant inventory costs are those costs that change based on the level of inventory held. The costs of expediting an order from a supplier are relevant incremental costs of stockouts because they only occur when there is a stockout, which is directly related to inventory levels. The other options (A, C, and D) describe either irrelevant or fixed costs that do not depend on changes in inventory levels.

Which of the Following Statements Is True of Relevant Inventory