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Question 288 - CSCP discussion

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Which of the following cost elements typically would be included in the cost of carrying inventory?

A.
Scrap during production
Answers
A.
Scrap during production
B.
Depreciation of product equipment
Answers
B.
Depreciation of product equipment
C.
Direct materials
Answers
C.
Direct materials
D.
Obsolescence
Answers
D.
Obsolescence
Suggested answer: D

Explanation:

The cost of carrying inventory includes several components, one of which is obsolescence. Obsolescence refers to the reduction in value of inventory over time as products become outdated or no longer useful. This is a critical cost element because it directly impacts the financial value of held inventory. Other carrying costs include storage costs, insurance, and capital costs. Options A, B, and C are costs associated with production or direct material expenses but do not fall under the typical carrying costs of inventory.

Waters, D. (2003). Inventory Control and Management.

https://www.supplychaindive.com

asked 16/09/2024
Carlo Hearne
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