When the carrying cost of inventory is expressed as a percentage:
A)the lower it is,the lower the economic order quantity.
B)it is usually the same as the borrowing cost of the organization.
C)it is multiplied by the unit variable manufacturing cost to calculate the per unit carrying cost.
D)it is multiplied by the total unit cost,including allocated fixed costs,to calculate the per unit carrying cost.
E)it is multiplied by the labor and material cost to calculate the per unit carrying cost.

Question

Quizplus · Accepted Answer

When the carrying cost of inventory is expressed as a percentage, it is multiplied by the unit variable manufacturing cost to calculate the per-unit carrying cost. This helps in determining the optimal economic order quantity that minimizes the total cost of inventory management.

When the Carrying Cost of Inventory Is Expressed as a Percentage