Mendelsohn Company Keeps 20 Days of Materials Inventory on Hand

Multiple Choice

Mendelsohn company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $4,000 per day. Bach, Inc., a competitor, keeps 10 days of inventory on hand, and the competitor's carrying costs average $2,000 per day.
The value-added costs are

A) $0.
B) $40,000.
C) $20,000.
D) $80,000.