Relevant incremental costs are added into relevant opportunity cost of capital to calculate

A. purchase order costs

B. relevant inventory carrying costs

C. irrelevant inventory carrying costs

D. relevant ordering costs

Answer: Option B

Solution(By Examveda Team)

Relevant incremental costs are added into relevant opportunity cost of capital to calculate relevant inventory carrying costs. Inventory carrying cost is the cost of holding goods in stock. Expressed usually as a percentage of the inventory value and includes cost of capital, warehousing, depreciation, insurance, taxation, obsolescence, and shrinkage.