What term describes the cost incurred when funds are tied up in unused inventory instead of being invested elsewhere?

Multiple choice question for Decision Making Process and Information. Select an option, then review the explanation below.

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expenses related to foreign operationscosts associated with subcontracting workexpenses from internal resource usethe cost of missed alternative investments

Explanation

When money is invested in idle inventory rather than being used for other potential investments, it results in an opportunity cost—the value of the next best alternative foregone.

Practice related questions from the same subject.

1.How is the expense of purchasing a new machine classified?
2.What term describes the practice of purchasing goods or services from foreign suppliers rather than domestic ones?
3.Within the context of relevance concepts, what is another term used for relevant revenues?
4.Which type of costs are irrecoverable and remain constant regardless of any actions taken?
5.What term describes the extra cost incurred when performing a specific activity?

What term describes the cost incurred when funds are tied up in unused inventory instead of being invested elsewhere?

Explanation

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