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AICPA Exam CPA-Business Topic 3 Question 97 Discussion
Actual exam question for
AICPA's
CPA-Business exam
Question #: 97
Topic #: 3
[All CPA-Business Questions]
Topic #: 3
Long Lake Golf Course has raised green fees to a nine-hole game due to an increase in demand.
Which of the following is correct?
Suggested Answer:
D
Choice 'd' is correct. Inspections. Inspections are part of order costs, not carrying costs.
Choices 'a' and 'c' are incorrect. Inventory carrying costs include all costs associated with warehousing (storing) inventory (e.g., storage, insurance, obsolescence, and spoilage associated with holding inventory).
Choice 'b' is incorrect. The economic cost of holding inventory includes the implicit (opportunity) cost of foregoing a return on the money invested in inventory.
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