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. The value-added costs are

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