Asked by Devyn Murray on Jul 12, 2024
Verified
Reserve inventory storage costs is classified as a shortage cost.
Reserve Inventory Storage Costs
Expenses associated with storing unsold merchandise or materials that a business holds in reserve beyond its immediate operational needs.
Shortage Cost
Costs incurred when demand exceeds supply, including opportunity costs of unmet sales and customer dissatisfaction.
- Understand the classification of costs related to inventory management and financial policies.
Verified Answer
MA
Maria AntonetteJul 15, 2024
Final Answer :
False
Explanation :
Reserve inventory storage costs are considered holding or carrying costs, not shortage costs. Shortage costs are associated with running out of stock, not with storing excess inventory.
Learning Objectives
- Understand the classification of costs related to inventory management and financial policies.
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