Question

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

Answer 1

Option D is the correct answer because all the costs are important in managing goods for sale in a retail company.

Carrying costs refers to the cost of holding inventory. It is also called holding costs which includes rent , salaries etc.

Stockout costs refers to the lost income that are incurred due to the unavailability of inventory.

Purchasing costs refers to the cost that are incurred while purchasing the goods.

Ordering costs incurred while process an order to the supplier. This costs are helpful in determining of economic order quantity.

Quality costs refers that costs needed to maintaining the quality of products.

Shrinkage costs refers to the costs which are incurred because of various factors like accounting errors, theft of goods etc included in shrinkage costs.