Question

Inventory cost is - options annual sales/inventory turnover x inventory carrying cost total sales/inventory carrying cost total cost/annual cost both (b) and (c)

Answer 1

In Manufacturing, Inventory is typically understood as (1) the components used to build the finished product and (2) the finished product themselves. Inventory has the unique property of “cash sitting in product” – in other words, inventory does nothing for the business until it is sold in exchange for a more liquid asset, such as cash. Until then, inventory is a cost.