A Company Keeps 20 Days of Materials Inventory on Hand

Multiple Choice

A company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $4,000 per day. A competitor keeps 10 days of inventory on hand, and the competitor’s carrying costs average $2,000 per day.
-Refer to the figure.What are the non-value-added costs for the company?

A) $80,000
B) $40,000
C) $30,000
D) $20,000