Which of the following statements about carrying costs is correct?

Carrying costs encompass a variety of expenses associated with the storage and maintenance of inventory over time, making the statement that they include costs of maintenance and insurance correct. These costs are crucial in inventory management since they can significantly affect the overall profitability of managing stock. Maintenance costs arise from the need to keep inventory in good condition, preventing damage or obsolescence, while insurance costs help mitigate the financial risks associated with loss, theft, or damage to inventory.

Understanding carrying costs is vital for effective product and inventory management, as they directly influence decisions regarding how much inventory to hold at any given time. By recognizing all components of carrying costs, businesses can optimize their inventory levels, reduce unnecessary expenses, and improve cash flow.

The other statements lack relevance or accuracy in the context of carrying costs. For instance, they do not inherently decrease as inventory levels rise; rather, carrying costs typically increase with more inventory. Additionally, they are highly relevant to product management, and they apply to various products, not just electronics.