Unlike ordering cost, setup cost:
A) includes the costs of completing paperwork, making phone calls, and getting competing bids.
B) is the cost of keeping inventory until it is used or sold.
C) is the cost of changing or adjusting a machine so that it can produce a different kind of inventory.
D) is also known as carrying or storage cost.

Question

Quizplus · Accepted Answer

Setup cost refers to the cost of changing a machine or production process to produce a different kind of inventory. It is not related to paperwork, phone calls, or competing bids, which are part of ordering cost (A). Carrying or storage cost (D) is the cost of holding inventory until it is sold or used.

Unlike Ordering Cost, Setup Cost