Question 1

A significant amount of accounting information is dedicated to planning and controlling the use of different categories of inventory and their attributable costs. Discuss, with examples, the five categories of costs that are associated with merchandise for resale and materials used for production.

1. Purchasing cost :

2. Ordering cost:

3.Carrying (M Holding ) cost:

4.Inventory shortfall ( stock -out)cost:

5.Quality cost:

Question 2

Cost-volume-profit (CVP) analysis is used to seek answers to questions such as: What will happen to the profit if the firm increases its selling price by 15%? Discuss the following under CVP analysis (present graphical representations where applicable):

i. The break-even graph

ii. The contribution graph

iii. The profit graph