Answer to Question #170143 in Management for kiki

Question

Question1

A significant amount of accounting information is dedicated to planning and controlling the use of different categories of inventory and their attributable costs. Discuss, with examples, the five categories of costs that are associated with merchandise for resale and materials used for production.

1.Purchasing cost

2.Ordering cost :

3.Carrying(holding cost):

4.Inventory cost :

5.Quality cost:

Question 2

Cost-volume-profit (CVP) analysis is used to seek answers to questions such as: “What will happen to the profit if the firm increases its selling price by 15%?” Discuss the following under CVP analysis (present graphical representations where applicable):

 

i. The break-even graph

ii. The contribution graph

iii. The profit graph  

 

Answer 1

Question 1.

1.purchasing cost - Generally, it is the net price plus other costs needed to purchase the item and get it to the point of use. These other costs can include: the item's purchasing costs (closing, research, accounting, commissions, legal fees), transportation, preparation and installation costs.

2.order cost - are essentially costs incurred every time you place an order from your supplier. Examples include: Clerical costs of preparing purchase orders — there are many kinds of clerical costs, such as invoice processing, accounting, and communication costs

3. Carrying cost - Carrying costs, also known as holding costs and inventory carrying costs, are the costs a business pays for holding inventory in stock. ... Even the cost of capital that helps to generate income for the business is a carrying cost.

4. Inventory cost - includes the costs to order and hold inventory, as well as to administer the related paperwork. This cost is examined by management as part of its evaluation of how much inventory to keep on hand

5. Quality cost - are the costs associated with preventing, detecting, and remediating product issues related to quality. Quality costs do not involve simply upgrading the perceived value of a product to a higher standard

Qustion 2.

1. Break-even grah - A break-even graph shows a break-even point (BEP) visually. A break-even graph shows the revenue, costs, number of products sold and BEP.

2. The contribution graph - graph of your repository contributions over the past year. You can choose to show anonymized activity from .

3. The profit graph - A risk graph, also known as a profit graph, is a two-dimensional graphical representation that displays the range of profit or loss possibilities for an options trade. The horizontal axis represents the price of the underlying security at expiration and the vertical axis represents the potential profit/loss.