Assignment 12

READING
1. Write a word or phrase that is similar in meaning to the underlined part.
1. What is Inventory Cost?
Inventory cost includes the costs to order and hold inventory, in addition to to administer the related
paperwork. This cost is examined by management as part of its evaluation of how much inventory to
keep on hand. Hence, this can result in changes in the order fulfillment rate for customers, as well as
variations in the production process flow. Inventory costs can be classified as follows.

2. What type of cost is inventory?

Ordering Costs : These costs include the wages of the procurement department and related payroll
taxes and benefits, and possibly similar labor costs by the industrial engineering staff, in case they
must pre-qualify new suppliers to deliver parts to the company.

Holding Costs : These costs are related to the space required to hold inventory, the cost of the
money needed to acquire inventory, and the risk of loss through inventory obsolescence.

Administrative Costs : The accounting department pays the wages of a cost accounting staff, which is
responsible for compiling the costs of inventory and the cost of goods sold, responding to other
inventory analysis requests, and defending their results to the company's internal and external
auditors.

VOCABULARY
2. Fill in the blanks with the correct words or phrases from the word bank.
Acquisition cost handling cost inspection cost Insurance Material
overhead cost interest

3. The expenses involved in sourcing and purchasing materials are included in

____________ .
4. The company purchased ____________ to protect its assets.
5. All of the expenses included in purchasing, handling, storing, and transporting
materials are calculate the Acquisition cost
6. Fuel price increases add to the cost of moving materials to calculate the
____________ .
7. The ____________ includes expenses incurred inspecting items upon
arrival, during storage, and prior to shipping.
8. Decreasing materials overhead cost releases cash for investments where
companies can earn ____________ .
GRAMMAR
1. Find the words of connective in the text of Inventory Cost and give the
information on types of connectives!