Question

Identify the cost being described according to the five basic costs of inventory. Write the letter of the correct answer. A. Carrying or Holding Cost B. Safety stock cost C. Item cost D. Stock out cost E. Ordering or setup cost 1. Cost of moving the goods to temporary storage 2. Amount of damaged, broken, pilfered and deteriorated items 3. Initial cost of the items 4. Potential depreciation of the material over time 5. Acquiring or renting a new warehouse 6. Processing and inspecting income inventory 7. Loss of future profit due to loss of goodwill 8. Opportunity cost 9. Sum of item cost, ordering cost and carrying cost 10. Developing and sending purchase orders

Answer 1

Solution 1) Cost of moving the goods to a temporary storage – A. Carrying or Holding Cost

2) Amount of damaged, broken, pilfered, and deteriorated items – A. Carrying or Holding Cost

3) Initial cost of the items – C. Item Cost

4) Potential depreciation of material over time - A. Carrying or Holding Cost

5) Acquiring or renting new warehouse - A. Carrying or Holding Cost

6) Processing and inspecting incoming inventory – E. Ordering or Setup Cost

7) Loss of Future profit due to loss of goodwill – D. Stock out Cost

8) Opportunity cost - A. Carrying or Holding Cost

9) Sum of item cost, ordering cost and carrying cost - C. Item Cost

10) Developing and sending purchase orders - E. Ordering or Setup Cost