Question

In the context of inventory costs, _____ are incurred as a result of the work involved in configuring tools, equipment, and machines within a factory to produce an item. a. unit costs b. holding costs c. setup costs d. stockout costs

Answer 1

The answer is setup cost (option C)

Step-by-step explanation:

Setup cost is simply the cost that comes with the setting up or configuration of production equipment, tools or machines that are needed to produce an item.

This kind of costs are often incurred when assembly or production lines of a factory have been changed. Thus, there is a need to spend money on securing the services of a setup mechanic as well as testing the first output in order to be sure that the equipment, tools or machines have been set up properly.