An average inventory in units is multiplied with annual relevant carrying cost of each unit to calculate ____________?
Correct answer: B. annual relevant carrying costs
- A. annual irrelevant ordering costs
- B. annual relevant carrying costs
- C. annual relevant ordering costs
- D. annual irrelevant carrying costsFinance
Explanation
Multiplying average inventory by the relevant carrying cost per unit gives the annual relevant carrying cost. This applies the per-unit cost to the average quantity held throughout the year.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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