Cost of Inventory and Costing Homework Help
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What is Inventory Cost?
Any cost incurred in order to hold the predefined storage of materials in order is termed as cost of inventory. Including the administration of paperwork, inventory cost looks after the maintenance of material, ordering of new lot and procurement during hard times. The cost is rather examined by the management to ensure the amount of inventory stored in hand. In this article for Cost of Inventory and Costing homework Help we discuss the various classifications and reasons for inventory cost.
Classification of Inventory Cost
As per our Cost of Inventory and Costing homework Help article, the inventory costs are classified below as
1. Ordering Costs: these costs related to the salaries and wages of the procurement department along with the taxes and benefits are usually included in the overhead cost pool.
2. Holding Cost: these costs are incurred when the inventory is held in storage for some time. Any inventory obsolesce is avoided to avoid any kind of loss. As pr our Cost of Inventory and Costing homework Help writers some holding cost include
a. Cost of space
b. Cost of money
c. Cost of obsolesce
3. Administrative Costs: the wages and salaries of accounting staffs and other worker along with the stationary and machinery used in the accounting department is included in administrative costs.
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Reasons for Inventory Cost in Cost of Inventory and Costing Homework Help Article
a. Maintenance of storage in warehouse
b. Procurement of new material
c. Smooth production flow
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