i) Purchase cost is the cost charged by the suppliers for the items purchased.
ii) Holding / carrying cost is the cost incurred as a result of having inventory item in the business. e.g.
- Opportunity cost of capital tied up in stock
- Insurance and security cost
- Refrigeration and conditioning
- Ware housing changes.
- Maintenance of machinery
iii) Ordering cost is the cost of bringing stock items into the store. They include loading and off loading charges cost of purchasing department, transport etc.
iv) Stock out cost or shortage cost is the cost incurred as a result of not having inventory items in stock. E.g. production disruption which may lead to lower production, lost discounts cost of speeding up orders and deliveries, lost customer good will.
Wilfykil answered the question on August 5, 2019 at 11:05
- Tido ltd buys and sells products Q3. It values stock on the basis of LIFO. As at 1st June 2001 stock in hand consisted of...(Solved)
Tido ltd buys and sells products Q3. It values stock on the basis of LIFO. As at 1st June 2001 stock in hand consisted of 4500 units which was acquired at sh 50 per unit. The operations for the month were as follows.
Date posted: August 5, 2019. Answers (1)
- Explain the Purchasing Systems(Solved)
Explain the Purchasing Systems
Date posted: August 5, 2019. Answers (1)
- Give the Steps followed in Procurement of Materials(Solved)
Give the Steps followed in Procurement of Materials
Date posted: August 5, 2019. Answers (1)
- List the Concepts of Cost accounting(Solved)
List the Concepts of Cost accounting
Date posted: August 5, 2019. Answers (1)
- What is the definition of:
1. Cost
2. Cost units(Solved)
What is the definition of:
1. Cost
2. Cost units
Date posted: August 5, 2019. Answers (1)
- Discuss the term "Management Accounting"(Solved)
Discuss the term "Management Accounting"
Date posted: August 5, 2019. Answers (1)
- What is the difference between financial accounting and cost accounting?(Solved)
What is the difference between financial accounting and cost accounting?
Date posted: August 5, 2019. Answers (1)
- What is the meaning of Financial accounting?(Solved)
What is the meaning of Financial accounting?
Date posted: August 5, 2019. Answers (1)
- Discuss Cost accounting and control(Solved)
Discuss Cost accounting and control
Date posted: August 5, 2019. Answers (1)
- Discuss the definition of and Scope of Cost Accounting(Solved)
Discuss the definition of and Scope of Cost Accounting
Date posted: August 5, 2019. Answers (1)
- Explain the Cost of Redeemable Debentures and Preference Shares(Solved)
Explain the Cost of Redeemable Debentures and Preference Shares
Date posted: August 5, 2019. Answers (1)
- Which are the Methods/models of Computing Cost of Capital?(Solved)
Which are the Methods/models of Computing Cost of Capital?
Date posted: August 5, 2019. Answers (1)
- Highlight the importance of Cost of Finance(Solved)
Highlight the importance of Cost of Finance
Date posted: August 5, 2019. Answers (1)
- What is meant by "Cost of Retaining Finance"?(Solved)
What is meant by "Cost of Retaining Finance"?
Date posted: August 5, 2019. Answers (1)
- What is the meaning of the term "Cost of Finance"?(Solved)
What is the meaning of the term "Cost of Finance"?
Date posted: August 5, 2019. Answers (1)
- Give the factors that affect Capital Structure(Solved)
Give the factors that affect Capital Structure
Date posted: August 5, 2019. Answers (1)