Case 1:

Determining and valuing stocks, cost of products offered is easy in a retailing business, however it is tough in a

producing business. It is to be kept in mind that the majority of the time the exact same cost can be categorized in

various methods for that reason, stating that cost has various types is a bit loose understanding since numerous at

times it is the exact same cost being categorized in a different way as we take a look at the very same thing from

various point of views. Cost may be classified in a variety of ways according to their nature and the information

needs of management.

Question:

a. From the above information, identify the type of cost classification discussed.

b. List and explain in your own words the different type of cost in that classification.

c. Illustrating with your own examples and graph, the cost type in total change in cost and per unit change

in cost.

Case 2:

Muscat Tubes Manufacturing LLC are the manufacturer of picture tubes for T.V. The following are the details of

their operation during 2019. Rate of consumption per week is 200 units for Muscat Tubes Manufacturing LLC.

Company estimated inventory carrying cost at 20% per annum. The ordering cost per order is RO 100. The cost

incurred for purchasing a tube is RO 500. The rate of consumption per week is 100 to 300 units and lead time to

supply is 6 to 8 weeks. During emergency purchase the lead time is 2 weeks.

Calculate the following:

a. Reorder level

b. Maximum level of stock

c. Minimum level of stock

d. Average level of stock

e. Danger Level