[amp_mcq option1=”$7,500″ option2=”$7,000″ option3=”$6,500″ option4=”$6,000″ correct=”option1″]<\/p>\n
The correct answer is A. $7,500.<\/p>\n
Relevant incremental costs are the costs that will change if a decision is made. Opportunity cost is the cost of not using an asset in its best alternative use. Inventory carrying costs are the costs of holding inventory, such as storage costs, insurance costs, and obsolescence costs.<\/p>\n
In this case, the relevant incremental costs are $5000 and the relevant opportunity cost of invested capital is $2500. Therefore, the relevant inventory carrying costs are $7500. This is because the company will incur $5000 in costs to produce the inventory, and it will also forgo the opportunity to earn $2500 by investing the capital in another project.<\/p>\n
Option B is incorrect because it includes the opportunity cost of invested capital, which is not a relevant cost. Option C is incorrect because it does not include the opportunity cost of invested capital. Option D is incorrect because it does not include the relevant incremental costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”$7,500″ option2=”$7,000″ option3=”$6,500″ option4=”$6,000″ correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[952],"tags":[],"class_list":["post-59030","post","type-post","status-publish","format-standard","hentry","category-costing","no-featured-image-padding"],"yoast_head":"\n