Inventory policy, Financial Accounting

Assignment Help:

Inventories constitute a important portion of the current assets ranging from 40 percent to 60 percent for manufacturing companies. The manufacturing companies conduct investments in the form of raw material, finished goods and work in processes. The three major motives for holding inventories are precautionary, speculative and transaction. The different factors that need to be considered whereas formulating inventory policy are as:

(a)  Costs

(b) Returns

(c)  Risk Factors.

There are two categories of costs related with inventory maintenance that are:

 (a)  Ordering Costs

(b) Carrying Costs.

The Economic Order Quantity (EOQ), order quantity that minimizes the sum of ordering and carrying cost. The inventory level at that the firm places order for additional inventory is identified as reorder point and it based on:

a. Lead time

b. The usage rate.

There are various inventory control systems; the most broadly used one is ABC and FSN System.


Related Discussions:- Inventory policy

Benefits of common stock and preferred stock, Evaluate the following statem...

Evaluate the following statements, and explain why you agree or disagree. (a)    In a recent interview, a Wall Street investment banker commented on the infrequent use of Prefer

Receiver necessary statement-bankruptcy, Receiver necessary statement T...

Receiver necessary statement The receiver may, if necessary, require the statement to be submitted by: Past or present officers of the company Persons who have taken

Determine the simple rate of return on the investment, Sheridon Corporation...

Sheridon Corporation is investigating automating a process by purchasing a new machine for $515,000 that would have a 10 year useful life and no salvage value. By automating the pr

What should Peter do? Suggest alternative courses of action, Peter has wor...

Peter has worked for five years as an assistant accountant for a large garage and vehicle repair workshop. In the past two weeks he has noticed that one of the managers, Simon, ha

Prior period adjustments, Q. Prior period adjustments a. may only increase ...

Q. Prior period adjustments a. may only increase retained earnings. b. may only decrease retained earnings. c. may either increase or decrease retained earnings. d. do not affect r

OPERATING CYCLE, APPLICABILITY OF THE OPERATING CYCLE IN VEGETABLE GROWING ...

APPLICABILITY OF THE OPERATING CYCLE IN VEGETABLE GROWING BUSINESS

INTANGIBLE ASSETS, Baruch Lev, who is a professor of accounting at New York...

Baruch Lev, who is a professor of accounting at New York University and a globally known academic for his research on financial reporting for intangibles, is that the economy has c

IAS16, Recognition of PPE

Recognition of PPE

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd