The opportunity cost of having money tied up in inventory is a type of ____ cost:
A)setup
B)production
C)carrying
D)penalty

Question

Quizplus · Accepted Answer

Carrying cost is the cost associated with holding inventory, including the opportunity cost of tying up money in stock. Setup costs refer to the expenses involved in preparing a machine or process for manufacturing. Production costs are costs associated with the actual manufacturing of goods. Penalty costs are fees or fines imposed for violating a contract or agreement.

The Opportunity Cost of Having Money Tied Up in Inventory