Which of the following is usually included as an inventory holding cost?

• A. Interest revenue
• B. Warehouse storage expenses
• C. Sales commissions
• D. Cost of goods purchased

Answer: (B)

Verified step by step guidance

1. Understand the concept of inventory holding costs: These are costs incurred to store and manage inventory until it is sold. They typically include expenses related to storage, insurance, depreciation, and opportunity costs.
2. Analyze each option provided in the question: Determine whether each option aligns with the definition of inventory holding costs.
3. Option 1 - Interest revenue: This is income earned from investments or loans and is not related to the cost of holding inventory. Therefore, it is not included as an inventory holding cost.
4. Option 2 - Warehouse storage expenses: These are direct costs associated with storing inventory, such as rent, utilities, and maintenance of storage facilities. This aligns with the definition of inventory holding costs.
5. Option 3 - Sales commissions and Option 4 - Cost of goods purchased: Sales commissions are costs related to selling inventory, not holding it. The cost of goods purchased refers to the acquisition cost of inventory, not the cost of storing it. Neither of these are considered inventory holding costs.