Which of the following is categorized as a tangible cost of inventory?

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Prepare for the UCF supply chain midterm. Utilize flashcards, multiple choice questions, and detailed explanations. Ace your test with these comprehensive study tools!

Tangible costs of inventory refer to direct, measurable expenses associated with holding and maintaining inventory. Spoilage and breakage are categorized as tangible costs because they result in physical loss of products, which can lead to a direct increase in expenses for a business. When inventory is damaged, lost, or becomes unsellable due to spoilage, the company incurs a measurable financial loss.

This distinguishes these costs from the other options provided. Opportunity cost, for instance, represents a theoretical loss of potential benefit from alternative expenditures or investments and does not have a direct physical manifestation. Devaluation, similarly, reflects a reduction in the market value of inventory but does not translate into a direct out-of-pocket expense until the inventory is sold. Obsolescence, while it can certainly lead to losses, generally represents a loss in value over time rather than an immediate cost due to physical degradation or damage. Therefore, spoilage and breakage stand out as tangible costs because they result in actual, quantifiable losses that can be directly accounted for in a company's financials.