A Study by a Consultant Shows That a Company That

Multiple Choice

A study by a consultant shows that a company that had $2,000,000 of inventory was holding excess inventory of $320,000 that could be eliminated with a few process improvements. It also has $620,000 in marketable securities that yield 5% per year. What is the estimated annual opportunity cost of holding the excess inventory?

A) $16,000
B) $100,000
C) $31,000
D) $47,000