If the relevant incremental costs are $5000 and the relevant opportunity cost of invested capital is $2500, then the relevant inventory carrying costs would be ____________?
Correct answer: A. $7,500
- A. $7,500
- B. $7,000
- C. $6,500
- D. $6,000Try Asset Software
Explanation
Relevant inventory carrying cost combines the relevant incremental carrying costs with the opportunity cost of invested capital: $5,000 + $2,500 = $7,500. The other figures do not result from adding the two stated components.
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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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