Cost of goods sold

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  • Ross Physical Store: A Case Study

    physical stores, customer troubles associated with online shopping, such as long shipping time, product returns due to wrong size, etc. are eliminated. For Ross, online stores would not be a good option. Michael O’Sullivan, the president and chief operating officer of Ross Stores, states that Ross operates within the moderate off-price space (Bailey, 2015). Also according to O’Sullivan, the average retail price of an item at Ross is normally around $10; there are not much merchandise of Ross whose price is higher than $20 (Bailey, 2015). Posting such a low-priced item on an e-commerce platform does not seem like a fruitful premise for Ross. For example, in the case of an average price around $10, O’Sullivan states if the company is left with the gross margin of $4 or $5 after removing the cost of goods sold, from the selling price, that gross margin would still be deducted from other costs, such as shipping costs, processing costs, and costs associated with product returns (Bailey, 2015). Additionally, Ross’s discount-apparel business originally buys merchandise in relatively small lot sizes (Bailey, 2015). Generating a variety of models in an online environment in which a particular item does not vary in size would be really complicated and not sufficient for Ross. Ross products can only be sold if the customers are able to find them on rack/shelf. The retailer operates five distribution processing facilities: two in California, two in South Carolina, and one in…

    Words: 1188 - Pages: 5
  • Consumer Value Store Case Summary

    were identified that contributed to the loss of around 7.2 million customers throughout the year, taking roughly 55 million annual prescriptions with them. On average, these prescriptions would increase revenue by $2.5 billion and so the loss was impeding growth. A financial analysis revealed a quick ratio of 0.55, much lower than the recommended 1.55, indicating poor profitability and liquidity. Annual gross margin has steadily dropped from 27.1% in 1998 to 25.1% in 2002. The annual income…

    Words: 1306 - Pages: 6
  • Inventory Valuation Methods Used At Redster Manufacturing Company

    different types of inventory valuation methods that has been used to compute the cost of goods sold under perpetual system, FIFO and LIFO cost flow, periodic system, FIFO and LIFO cost flow, weighted average cost, and moving average cost flow. Periodic System, FIFO cost flow The companies with inventory items of small unit cost update its inventory records at the end of an accounting…

    Words: 758 - Pages: 4
  • American Eagle Executive Summary

    American Eagle evaluates its merchandise inventory at the lower of average cost or market, using retail method. Average cost includes merchandise design and sourcing costs and related expenses. American Eagle records its merchandise receipts at the time merchandise is delivered to the foreign shipping port by the manufacturer; by now the title and risk of loss is transferred to the company. Merchandise inventory for the most recent year is valued at $278,972,000. This amount represents a current…

    Words: 572 - Pages: 3
  • Wave Riders Surfboard Company Case Study

    account is due to purchases, purchase returns and allowances, sales and sales returns are recognized in the inventory account balance. Perpetual inventory systems show all changes in inventory in the “inventory” account. Purchase accounts are not used in the perpetual inventory system. This is to keep the inventory balance current at all times. 4. Inventory valuation methods: computations and concepts. Wave Riders Surfboard Company began business on January 1 of the current year. Purchases…

    Words: 1870 - Pages: 8
  • Job Costing Essay

    Job costing is a system that assigns manufacturing costs to a product or batches of products. This system is used when the end products are different from each other. The job cost companies will allocate the direct materials and direct labor actually used plus the manufacturing overhead to each job. The job costing is very popular not only in manufacturing, but also in service (accounting practices, law firms, etc) and builders and construction contractors. Job costing involves the following…

    Words: 792 - Pages: 4
  • Graham's Manufacturing Industries Case Study Solution

    variable cost is $1 per flange for materials, and $2 per flange ($20 per hour divided by 10 flanges per hour) for direct manufacturing labor. 2. The inventoriable (manufacturing) cost per unit for 5,000 flanges is $3 × 5,000 + $20,000 = $35,000. Average (unit) cost = $35,000 ÷ 5,000 units = $7 per unit. This is below Fred’s selling price of $8.25 per flange. However, in order to make a profit, Graham’s Glassworks also needs to cover the period (non-manufacturing) costs of…

    Words: 6150 - Pages: 25
  • Advantages And Disadvantages Of A Flexible Budget

    levels, which is why it is a good performance evaluation tool and useful for any planning. Just like its good odds the flexible budget has its disadvantages as well. It may be a good tool but difficult to formulate, because there are several costs that are not entirely variable. Therefore, it will be necessary to take into account those fixed cost components that must be calculated and then included in the flexible budget formula. The flexible budget generally works best in a relatively small…

    Words: 972 - Pages: 4
  • Bottom Line Analysis

    The “Bottom Line” The income statement shows how much revenue a company earned over a defined period (typically a year or a quarter), plus the costs and expenses related to generating that revenue. The “Bottom Line” demonstrates net earnings or losses over the period. Income statements also show earnings per share (EPS). EPS shows how much money shareholders would receive if all of the net earnings for the period were distributed. (A highly unlikely occurrence; they’re usually reinvested.)…

    Words: 713 - Pages: 3
  • Karex Case Study

    The calculation does not involve too much of complication. The managers of Karex just need to apply weights for the same types of product with its cost and aggregate the result. One single hurdle rate to categorize the products price saves a lot of time of the managers in stock valuation. Since, single rate is used, Karex can prompt decisions making more easily and at a faster pace. Using single hurdle rate also minimizes the effect of unusually high or low materials prices. It is practical for…

    Words: 2961 - Pages: 12
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