The required rate of return, is multiplied per unit cost of purchased units to calculate __________?
Correct answer: B. relevant opportunity cost of capital
- A. irrelevant inventory carrying costs
- B. relevant opportunity cost of capital
- C. relevant purchase order costs
- D. relevant inventory carrying costsFinance
Explanation
The opportunity cost of capital tied up in purchased inventory is calculated by multiplying the required rate of return by the cost of the units purchased. It represents the return sacrificed by investing funds in inventory.
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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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