Which of the following is NOT typically considered a cost associated with holding inventory in a warehouse?

• A. Insurance on inventory
• B. Sales commissions paid to sales staff
• C. Depreciation of warehouse equipment
• D. Utilities for warehouse lighting and climate control

Answer: (B)

Verified step by step guidance

1. Understand the concept of inventory holding costs: These are costs incurred to store and maintain inventory in a warehouse. Examples include insurance, utilities, depreciation, and other expenses directly related to the storage and upkeep of inventory.
2. Analyze each option provided in the question: Determine whether each cost is directly associated with holding inventory in a warehouse. For example, insurance on inventory is a cost incurred to protect the inventory, and utilities are necessary for lighting and climate control in the warehouse.
3. Consider the nature of sales commissions: Sales commissions are payments made to sales staff for selling products. These costs are not related to the storage or maintenance of inventory but are instead associated with the selling process.
4. Compare sales commissions to other options: Unlike insurance, depreciation, and utilities, sales commissions are not tied to the physical storage or management of inventory in the warehouse.
5. Conclude that sales commissions paid to sales staff are NOT typically considered a cost associated with holding inventory in a warehouse, as they are related to sales activities rather than inventory storage.