COST ACCOUNTING
INVENTORY AND PRODUCTION MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following costs is NOT considered a carrying cost for inventory?
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Capital costs
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Inventory insurance costs
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Distribution costs
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Storage costs
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Explanation:
Detailed explanation-1: -Depreciation and obsolescence. Option b is actually correct answer that is Property tax that is not related to cost of carrying inventory.
Detailed explanation-2: -Storage cost is not included in the cost of inventory.
Detailed explanation-3: -Carrying cost includes the cost of renting the warehouse where the stock is kept, operating the warehouse, paying the salaries of the employees working at the warehouse, any loss of inventory due to theft and damage, and insuring the inventory.
Detailed explanation-4: -Ordering, holding, carrying, shortage and spoilage costs make up some of the main categories of inventory-related costs.
There is 1 question to complete.