Question

Which of the following cost categories are important in managing goods for sale in a retail​ company? A. 1. carrying costs 2. stockout costs B. 1. quality costs 2. shrinkage costs C. 1. purchasing costs 2. ordering costs D. All of the above are correct.

Answer 1

Answer:

D. All of the above are correct.

Explanation:

Carry Cost : This is the total cost incurred by an entity for taking ownership and storing inventory items, some of these costs are rent of warehouse, inventory insurance, salary of warehouse staff e.t.c.

Stock-out Costs : The is the lost of income and all the expenses associated with the inability to meet customers' orders due to shortage in inventory.

Quality Costs : This is cost incurred by a firm for ensuring that product conforms to established quality standard as well as cost incurred in investigating and correcting substandard products produced.

Shrinkage Costs :

This is the monetary value of the inventory items lost as a result of sharp practices or poor storage environment.  

Purchasing Costs : This is the actual cost incurred in buying inventory and bringing it to its present location less any sales discount.

Ordering Costs : This is the entire cost incurred in processing and placing order for inventory.

We can see that all of the above are important in managing goods for sale in a retail​ company.