What does the cost of inventory include, and what are the main costs of inventory

The cost of inventory is the various expenses incurred in the process of ordering, purchasing and storing inventory, as well as the economic loss caused by inventory shortage. It generally includes:

1) Acquisition costs. It refers to the cost of purchasing goods and obtaining ownership of goods, usually including the purchase price of goods, transportation and miscellaneous expenses, loading and unloading fees, etc. It mainly depends on two factors: the quantity of goods purchased and the cost per unit acquisition.

2) Order cost. It refers to the relevant expenses incurred in ordering goods, including the cost of the purchasing department, the document processing fee in the process of ordering, the postal and telecommunications fee, etc.

It can be divided into two parts, variable and fixed, in which the variable order cost is the expense directly related to the number of orders, and the fixed order cost is the necessary cost to maintain the normal activities of the procurement department.

3) Storage costs. It refers to the expenses incurred in the storage process, including depreciation costs, repair costs, insurance premiums and interest on occupied funds of warehouse buildings.

It can also be divided into two parts, variable and fixed, where the variable storage cost refers to the expenses directly related to the storage quantity, and the fixed storage cost is the necessary expenses to maintain a certain storage capacity.

4) Out-of-stock costs. It refers to the economic losses caused by the failure to store sufficient inventory to meet the needs of production and operation, such as the loss of work stoppage caused by inventory shortage, the loss of profit margins due to the production of less products, the fines paid due to late delivery, and the loss of goodwill.

The cost of stockouts depends on the amount of insurance reserves, the higher the amount of insurance reserves, the less likely it is to go out of stock, and the lower the cost of stockouts;Conversely, the greater the likelihood of being out of stock, the higher the cost of running out of stock.

A: Inventory cost includes purchase cost, processing cost and.

Other costs. 1) The purchase cost of inventory generally includes the purchase price, relevant taxes, transportation costs, loading and unloading costs, insurance premiums and other fees.

Expenses attributable to the cost of inventory purchases.

2) The processing cost of inventory includes direct labor as well as press.

The cost of manufacturing that is allocated in a certain way.

3) Other inventory costs refer to the cost of procurement, processing.

In addition to the cost, the inventory is issued to the current place and state.

other expenses of life.

The inventory cost first includes some costs of inventory products, and the most important thing is to include some storage costs and management costs.

Inventory costs include the following:1. Procurement costs. The cost of purchasing inventory, including the purchase price, related taxes, transportation, handling, insurance, and other expenses attributable to the cost of purchasing inventory.

Among them, the purchase price of inventory refers to the price listed on the invoice of the materials or commodities purchased by the enterprise, but does not include the VAT amount that can be deducted according to the regulations.

2. Processing cost. The processing cost of inventory refers to the additional expenses incurred in the processing process of inventory, including direct labor and manufacturing expenses allocated according to a certain method. Direct labor refers to the remuneration of employees directly engaged in the production of products and the provision of labor services in the process of producing products and providing services.

Manufacturing expenses refer to the indirect costs incurred by enterprises in the production of products and the provision of services.

3. Other costs. Other costs of inventory refer to other expenses incurred to bring inventory to its current location and state, except for procurement costs and processing costs. The design expenses incurred by enterprises in designing products should usually be included in the current profit or loss, but the design expenses incurred in designing products for specific customers and can be directly determined should be included in the cost of inventory.

1. Procurement costs.

The procurement cost mainly includes the purchase of raw materials or products, transportation and miscellaneous expenses. In general, the inventory cost of an enterprise is the cost of procurement.

Enterprises generally set up two accounts when keeping accounts, one is the plan, which guides the enterprise to consider the fluctuation of raw materials in the case of the plan; The other is the difference in the cost of raw materials.

2) Order cost.

The order cost refers to the travel front distribution fee, negotiation fee, postage fee, ** fee, and cargo inspection and storage fee incurred in the process of material procurement and ordering. The order cost is related to the number of orders, and the more orders there are, the higher the incidence of order costs and the higher the order cost. In accounting purposes, these expenses are generally included in the management expenses.

Takeaways. Inventory Cost Contents:

procurement costs; order cost;

storage costs; Out-of-stock costs.

3) Storage costs.

Storage costs include storage fees, handling fees, insurance premiums, benefit expenses, deterioration losses, etc., which refer to the expenses incurred during the storage of products. This fee will eventually be included in the management fee.

4) Out-of-stock costs.

The out-of-stock cost refers to the loss incurred by the enterprise due to the lack of inventory and the inability to meet the needs of production and operation, including the loss of shutdown and waiting for materials, the loss of late delivery fines, the loss of corporate reputation, etc., these losses are not direct expenses, but equivalent to opportunity costs. This opportunity cost is different from the traditional purchase of inventory into the side cost of the enterprise, and the purpose is not only to consider the purchase cost when purchasing, but also to calculate the economic batch, fully consider the order cost, and choose the order method with the lowest total cost.

1) Invoice** (price list** minus commercial discount) at the time of purchase of goods** minus purchase discount;

2) The freight, insurance, tax expenses and normal wear and tear in transit borne by the buyer during the transportation of the goods;

3) Handling costs, such as re-ironing of wrinkled garments in transit.