ECONOMICS

Detailed explanation-1: -Carrying cost is the amount that a business spends on holding inventory over a period of time. It is the cost of owning, storing, and keeping the items in stock.

Detailed explanation-2: -Both US GAAP and IFRS stipulate that the costs that are to be included in inventories are “all costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their present location and condition.”

Detailed explanation-3: -Inventory carrying costs-the full amount businesses spend to stock and store items before they’re sold-can have a significant impact on profitability.

Detailed explanation-4: -Inventory holding costs are calculated as part of the total inventory costs within a single supply chain. Costs include warehousing, insurance, labor, transportation, depreciation, inventory shrinkage, damaged or spoiled inventory, obsolescence, and opportunity costs.

Detailed explanation-5: -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.