Answer (C) is correct . The costs of holding or storing inventory are carrying costs. Examples include the costs of capital, insurance, warehousing, breakage, and obsolescence.
Answer (A) is incorrect because Prime cost is the sum of direct materials and direct labor.
Answer (B) is incorrect because Quality cost is the cost of assuring a product meets standards of quality; quality costs consist of prevention costs, appraisal costs, internal failure costs, and external failure costs.
Answer (D) is incorrect because Stockout cost is either the lost revenue from a missed sale or the express shipping costs of making a product available on an urgent basis.
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