Which of the following is NOT a cost associated with inventory management?

• A. Insurance on inventory
• B. Depreciation expense on office equipment
• C. Inventory shrinkage losses
• D. Storage costs for inventory

Answer: (B)

Verified step by step guidance

1. Understand the concept of inventory management costs: Inventory management costs are expenses directly related to storing, handling, and protecting inventory. These costs ensure the inventory is maintained in good condition and ready for sale or use.
2. Analyze each option provided: Review each cost listed in the problem and determine whether it is directly associated with inventory management. For example, insurance on inventory is a cost incurred to protect inventory from risks like theft or damage.
3. Evaluate depreciation expense on office equipment: Depreciation expense on office equipment is not directly related to inventory management. It is an accounting expense related to the wear and tear of office equipment, which is unrelated to storing or handling inventory.
4. Consider inventory shrinkage losses: Inventory shrinkage losses occur due to theft, damage, or errors in inventory records. These are directly associated with inventory management as they impact the value and quantity of inventory.
5. Assess storage costs for inventory: Storage costs are incurred to house inventory in warehouses or storage facilities. These are directly related to inventory management as they ensure inventory is stored securely and efficiently.