A company has 5 days of finished goods inventory on hand to avoid stockouts. The carrying costs of the inventory average $5,000 per day. The value-added costs are
A)$-0-.
B)$1,000.
C)$5,000.
D)$25,000.

Question

Quizplus · Accepted Answer

Value-added costs are costs that increase the value of a product or service to customers. In this context, the carrying costs of inventory are not considered value-added costs, so the value-added costs are $0.

A Company Has 5 Days of Finished Goods Inventory on Hand