ECONOMICS

COST ACCOUNTING

INTRODUCTION TO COST ACCOUNTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Interest on capital invested is an example of ____
A
Setting up cost
B
Carrying cost
C
Ordering cost
D
Manufacturing cost
Explanation: 

Detailed explanation-1: -Carrying costs are the various costs a business pays for holding inventory in stock. Examples of carrying costs include warehouse storage fees, taxes, insurance, employee costs, and opportunity costs.

Detailed explanation-2: -Components of carrying cost It includes the interests added and the cost of money invested in the inventory. Capital cost is always expressed as a percentage of the total value of the inventory being held.

Detailed explanation-3: -Cost of carry refers to costs associated with the carrying value of an investment. These costs can include financial costs, such as the interest costs on bonds, interest expenses on margin accounts, interest on loans used to make an investment, and any storage costs involved in holding a physical asset.

Detailed explanation-4: -Depreciation and obsolescence. Option b is actually correct answer that is Property tax that is not related to cost of carrying inventory.

There is 1 question to complete.