Which of the following is an opportunity cost associated with financial holding costs?

Question

Quizplus · Accepted Answer

Financial holding costs refer to the expenses associated with holding inventory, such as storage and insurance costs. These costs are incurred whether there is too much or too little inventory. If there is too much inventory, the opportunity cost is the potential revenue or profit that could have been generated if the inventory was sold or used in production. If there is too little inventory, the opportunity cost is the potential sales that could have been generated if the inventory was available to meet customer demand. Therefore, the correct choice is C, both too much inventory and too little inventory.

Which of the Following Is an Opportunity Cost Associated with Financial