Question

1. T/F During a Cycle Count all of the items on hand are counted.

2. Which of the following expenses would not be included when calculating Holding costs?

a) insurance premiums on inventory

b) costs of lost inventory due to theft, spoilage, or forklift drivers crashing into racks

c) cost to changeover a machine from one product to another

d) taxes based on the value of inventory held

Answer 1

1. False

During a cycle count which is generally an audit of inventory process and in this case a small portion or subset of the inventory is analyzed on a certain day and based on a certain locationb.

2. c) cost to changeover a machine from one product to another

The holding cost of an inventory is the cost associated with the products that are unsold and they include the cost of goods damaged or spoiled and the insurance and tax expenses of maintaining these products.