Acquisition Cost is defined as the price the pharmacy pays for the product.

• A. Acquisition Cost
• B. Carrying Costs
• C. Procurement Costs
• D. Stock Out Costs

Answer: (A)

Acquisition cost is the price the pharmacy pays to obtain each unit of inventory. It represents the purchase price on the supplier’s invoice and is used to value inventory and compute cost of goods sold. This cost is distinct from carrying costs, which are the expenses of holding stock (storage, insurance, depreciation); from procurement costs, which cover the activities and expenses of ordering and receiving goods; and from stock-out costs, which occur when inventory isn’t available to meet demand. Since the statement defines acquisition cost as the price paid for the product, it correctly identifies the base cost of purchasing the item.