Inventory Management: Planning, Coordination, Controlling Flow of Inventory

General > Cost Basis 330-10-30330-10-30-1 The primary basis of accounting for inventories is cost, which has been defined generally as the price paid or consideration given to acquire an asset. As applied to inventories, cost means in principle the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. It is understood to mean acquisition and production cost, and its determination involves many considerations. 330-10-30330-10-30-2 Although principles for the determination of inventory costs may be easily stated, their application, particularly to such inventory items as work in process and finished goods, is difficult because of the variety of considerations in the allocation of costs and charges.

a. Correctly applied b. Overapplied c. Underapplied d. None of the above 3. Using the variable costing method, which of the following costs are assigned to inventory?

Two fundamental decisions that one has to make when controlling inventory: How large should an inventory replenishment order be? When should an inventory replenishment order be placed? The objectives of inventory management often reduce the Results of Harley Davidson’s JIT Implementation: Inventory levels decreased 75 percent. Increased productivity. Harley Davidson’s success with the implementation of JIT had a lot to do with the fact that when JIT was put into practice, process problems could no longer be hidden by costly inventory that helped to meet ship dates. The inefficiencies in the processes were quickly identified and solved.

2. How do inventory management practices and policies influence planning inventory requirements and managing uncertainty? Inventory planning is done through a stream of information, which is shared between vendors and allows independent vendors assess how much inventory is being made and allows everyone to be on the same page. This helps

Inventory costs are of different types: • ‘holding cost of inventory management’ which includes both the capital cost of money tied in inventory and the physical cost of holing

1) Both managerial and financial accounting are governed by GAAP a) True b) False 2) Management accounting information is only used by manufacturing organizations. a) True b) False 3) The managerial activity of monitoring a plan’s implementation and taking corrective action as

• Inventory Service cost; these costs are typically cost of insurance and taxes • Inventory Risk cost; these costs are related to the risk the products faces in the warehouse such as a decrease in the dollar value of the product caused from obsolescence, breakages, spoilage etc.

1. How does the cost of carrying inventory impact the traditional earning statement of the enterprise?

1.0 INTRODUCTION A study of inventory management at SARK CABLES LTD is undertaken inorder to know the inventory performance and position of the company and to know the strength and weakness and to assess the profitability of the company. Inventories constitute most significant part of assets of large majority of the companies in India. Inventory a double edged sword is usually an asset of an organization, if not used properly it will become liability. It is therefore absolutely important to manage inventories efficiently and effectively in order to overcome unnecessary investment.

Absorption and Variable Costing, Inventory Management Absorption and Variable costing are very important tools for cost accounting. Both of these costing methods allow you to see the cost of your inventory, in a different way. For example the absorption method allows you to assign all costs to the product,

7. _________cost tend to vary directly with volume of output. 8. _________cost is prepared before accepting an order for submitting price quotation. 9. _________cost refers to the cost incurred in promoting sales and advertisement. 10. The Production cost originates with the process of supplying material labor and services and finishes with ________ of the finished product.

the cause of inventory; therefore efficient inventory management is very important in supply chain operation and it helps the firm to maintain competitive advantage (Stock and Lambert, 2001; Axsäter, 2006). In this area only large scale multi-national companies have set a number of

(d; p. 15) 26. ____________ refers to being out of an item at the same time there is demand for it.

Chapter 1 Basic Cost Concepts Learning Objectives • To understand the meaning of different costing terms to understand different costing methods • To have a basic idea of different costing techniques • To understand the meaning of cost sheet In order to determine and take a dispassionate view about what lies beneath the surface of accounting figures, a financial analyst has to make use of different management accounting techniques. Cost techniques have a precedence over the other techniques since accounting treatment of cost is often both complex and financially significant. For example, if a firm proposes to increase its output by 10%, is it reasonable to expect total cost to increase by less than 10%, exactly 10% or

Business Inventory Control Meghan Farrar, Amanda May, Nancy Dinges, Scott Moore and Bianca Holmes American Public University Introduction “Inventory is one of the most expensive and important assets to many companies, representing as much as 50% of total invested capital. Managers have long recognized that good inventory control is crucial” (Render et al, 2011). Therefore, it is really no surprise that companies place such a high importance on inventory control. An analysis of the planning and forecasting process, as well as the uses of inventory control will certainly verify the significance of inventory control in the business environment. In addition, by utilizing several inventory methods: economic order