When the carrying cost of inventory is expressed as a percentage:
A) it is usually the same as the borrowing cost of the organization.
B) the lower it is, the lower the economic order quantity.
C) it usually exceeds 57.5 percent per year.
D) it must exclude the insurance cost of inventory.
E) it is multiplied by the material unit cost to calculate the per unit carrying cost.

Question

Quizplus · Accepted Answer

The carrying cost percentage is multiplied by the unit cost of the material to determine the per unit carrying cost, which includes storage, insurance, and opportunity costs.

When the Carrying Cost of Inventory Is Expressed as a Percentage