Short and simple Presentation

1. Name :- Subhajit Mukherjee
Student Code :- BWU/BBF/17/004
Corse :- B.Com(H) Banking $
Financial Account
Subject :- Cost Accounting
Topic :- Significance of
odering cost and carrying cost.

2. Inventory cost
Inventory cost are the costs
related to storing and maintain
its inventory over a chain period
of time. Typically inventory costs
are described as a percentage of
the inventory value on an
annualized basic.

3. Inventory
Ordering cost Carrying Cost
Acquiation Cost

4. Ordering Cost
Ordering cost also know as setup costs
are, essentially costs incurred every
time when you order. ` Examples of
ordering costs include salaries of
purchasing clerks, telephone, and
stationery. Ordering costs go up as an
entity increases the number of small
quantity purchases. Total ordering
costs plus total carrying costs equal
total inventory costs.

5. Example :-
 Clerical Costa of preparing purchase orders :-
There are many kinds of clerical costs, such as
invoice processing, accounting and communication
cost.
Cost of finding suppliers and expending orders :-
Costs spent these will likely be inconsistent, but they
are important expenses for the business .
Transportation Costs :- The costs of the goods to
the warehouse or store. These costs are highly
variable across different industries and items.

6. Holding Cost/Carrying Cost
These are costs involved with storing
inventory before it is sold. Whatever product
you sell, it is likely that you’ll have to keep a
certain amount of inventory in stock to fulfill
sales orders. Example of carrying cost are
storage costs, insurance premiums, taxes,
inventory obsolescence and spoilage. Carrying
costs increase as the inventory level increases.
Total carrying costs plus total ordering costs
equal total inventory costs

7. Example :-
 Storage Space Cost :- These are costs related to the place
where the inventory is stored, and will vary by location. There will
be the cost of the storage facility itself, or lease payment s if is
not owned. Then there are facility maintence costs like lighting ,
heating. Depreciation and property taxes are also include in this.
Inventory services costs :- this include the cost of the physical
handling of the goods, as well as insurance, security, and IT
hardware and application if these are used.
Inventory risk costs :- A major cost is shrinkage, which is loss
the lost of products between purchasing from the supplier and
final scale due to any number of reason theft, vendor fraud,
shipping errors, damage in transit or storage.