Open in App
Log In Start studying!

Select your language

Suggested languages for you:

Name six cost categories that are important in managing goods for sale in a retail company.

Short Answer

Expert verified
The six cost categories important in managing goods for sale in a retail company are 1) inventory costs, 2) purchase costs, 3) labor costs, 4) marketing and advertising costs, 5) packaging and labeling costs, and 6) shipping and transportation costs. These cost categories play a crucial role in maximizing profit margins and maintaining the financial performance of a retail company.
See the step by step solution

Step by step solution

Unlock all solutions

Get unlimited access to millions of textbook solutions with Vaia Premium

Over 22 million students worldwide already upgrade their learning with Vaia!

Step 1: 1. Inventory Costs

Inventory costs are the expenses related to holding and storing goods for sale in a retail company. This includes the cost of storing the products in warehouses or storage facilities, insurance, taxes, and depreciation of goods. It's important for retail companies to manage inventory costs efficiently to ensure profitability.

Step 2: 2. Purchase Costs

Purchase costs are the expenses associated with acquiring products from suppliers. This includes the cost of goods, shipping and handling fees, import duties, and any other costs associated with the procurement of the products. Retail companies need to manage their purchase costs effectively to maintain healthy profit margins.

Step 3: 3. Labor Costs

Labor costs are the expenses related to employees involved in managing goods for sale. This includes salaries, wages, benefits, and training costs for employees working in sales, inventory management, and warehouse operations. Retail companies must manage their labor costs wisely to avoid overstaffing and keep operating costs low.

Step 4: 4. Marketing and Advertising Costs

Marketing and advertising costs are expenses related to promoting and selling goods in the retail company. This includes costs for advertising campaigns, promotional materials, public relations, and in-store displays. Effective management of marketing and advertising costs ensures that the retail company maximizes its product visibility and sales potential.

Step 5: 5. Packaging and Labeling Costs

Packaging and labeling costs are expenses associated with preparing goods for sale. This includes the costs of packaging materials, custom packaging designs, labeling, and printing. Efficient management of packaging and labeling costs allows retail companies to present their products attractively and ensure compliance with product labeling regulations.

Step 6: 6. Shipping and Transportation Costs

Shipping and transportation costs are expenses incurred when moving goods from suppliers to retail stores or directly to customers. These costs include freight charges, fuel expenses, and transportation insurance. Retail companies must closely manage their shipping and transportation costs to maintain competitive pricing and profitability. In summary, the six cost categories important in managing goods for sale in a retail company are inventory costs, purchase costs, labor costs, marketing and advertising costs, packaging and labeling costs, and shipping and transportation costs. By efficiently managing these costs, retail companies can maximize their profit margins and overall financial performance.

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Access millions of textbook solutions in one place

  • Access over 3 million high quality textbook solutions
  • Access our popular flashcard, quiz, mock-exam and notes features
  • Access our smart AI features to upgrade your learning
Get Vaia Premium now
Access millions of textbook solutions in one place

Most popular questions from this chapter

Chapter 20

JIT production, relevant benefits, relevant costs. The knot manufactures men's neckwear at is Spartanburg plant. The Knot is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production: a. Annual additional tooling costs \(\$ 25,000\) annually b. Average inventory would decline by \(80 \%\) from the current level of $\$ 1,000,000$ c. I Insurance, space, materials-handling, and setup costs, which currently total \(\$ 400,000\) annually, would decline by \(20 \%\) d. The emphasis on quality inherent in JIT production would reduce rework costs by \(25 \%\). The Knot cur renty incurs \$160,000 in annnual rework costs e. Improved product quality under JIT production would enable The Knot to raise the price of its product by S2 per unit The Knot sells 100,000 units each year The Knot's required rate of return on inventory investmentis \(15 \%\) per year 1\. Calculatet the net benefit or cost to The Knotifit adopts JIT production at the Spartanburg plantt 2\. What nonfinancial and qualitative factors should The Knot consider when making the decisision to adopt JIT production? 3\. Suppose The Knot implements JIT production at its Spartanburg plant. Give examples of performance measures The Knot could uss to evaluate and control JIT production. What would be the benefit of The Knot implementing an enterprise resource planning (ERP' system?

Chapter 20

The order size associated with the economic-order-quantity (E00) model will necessarily decline if a. Ordering costs rise b. Storage costs rise c. Insurance costs for materials in storage fall d. Stockout costs rise

Chapter 20

Supply-chain effects on total relevant inventory cost. Peach Computer Co. outsources the production of motherboards for its computers. It is currently deciding which of two suppliers to use: Alpha or Beta. Due to differences in the product failure rates in the two companies, \(5 \%\) of motherboards purchased from Alpha will be inspected and \(25 \%\) of motherboards purchased from Beta will be inspected. The following data refer to costs associated with Alpha and Beta: 1\. What is the relevant cost of purchasing from Alpha and Beta? 2\. What factors other than cost should Peach consider?

Chapter 20

E00 for manufacturer. Sk8 Company produces skateboards and purchases 20,000 units of a wheel bearing each year at a cost of \(\$ 1\) per unit. Sk 8 requires a \(15 \%\) annual rate of return on investment. In addition, the relevant carrying cost (for insurance, materials handling, breakage, etc.) is \(\$ 0.17\) per unit per year. The relevant ordering cost per purchase order is \(\$ 38.40\) 1\. Calculate Sk8's E00 for the wheel bearing. 2\. Calculate Sk8's annual relevant ordering costs for the E00 calculated in requirement 1. 3\. Calculate Sk8's annual relevant carrying costs for the E00 calculated in requirement 1. 4\. Assume that demand is uniform throughout the year and known with certainty so there is no need for safety stocks. The purchase-order lead time is half a month. Calculate Sk8's reorder point for the wheel bearing.

Chapter 20

What assumptions are made when using the simplest version of the economic- order-quantity (E00) decision model?

Join over 22 million students in learning with our Vaia App

The first learning app that truly has everything you need to ace your exams in one place.

  • Flashcards & Quizzes
  • AI Study Assistant
  • Smart Note-Taking
  • Mock-Exams
  • Study Planner
Join over 22 million students in learning with our Vaia App Join over 22 million students in learning with our Vaia App

Recommended explanations on Math Textbooks