A company has 19 days of finished goods inventory on hand to avoid stockouts. The carrying costs of the inventory average $6,000 per day.
The non-value-added costs are
A)$250.
B)$10,000.
C)$5,000.
D)$114,000.

Question

Quizplus · Accepted Answer

The non-value-added costs are calculated by multiplying the daily carrying costs by the number of days of inventory on hand. Therefore, $6,000 per day * 19 days = $114,000.

A Company Has 19 Days of Finished Goods Inventory on Hand