Question

Inventory carrying costs include all of the following except:

(A) obsolescence and deterioration
(B) clerical cost of ordering goods
(C) insurance costs
(D) opportunity cost of investment funds

Answer 1

Clerical cost of ordering goods is not an inventory carrying cost but an ordering cost. Inventory carrying costs include costs such as obsolescence, insurance, and the opportunity cost of funds.

Step-by-step explanation:

Among the options provided, inventory carrying costs include obsolescence and deterioration (A), insurance costs (C), and the opportunity cost of investment funds (D). However, clerical cost of ordering goods (B) is not typically considered an inventory carrying cost but rather is classified as an ordering cost. Inventory carrying costs are expenses related to storing and holding inventory, including costs associated with warehousing, handling, insurance, and depreciation, while ordering costs are associated with the process of replenishing inventory.