Answer:
Stone Inc. is a company that purchases goods (e.g., chess sets, pottery) from overseas and resells them to gift shops in the United States. Stone Inc. is
a) Wholesaler
Manufacturing firm is one where finished goods are produced using raw material with the help of labor and manufacturing overhead. Stone Inc. is not producing any thing thus it is not a manufacturer.
Wholesaler is one who is a middle man between the manufacturers and retailers. The wholesalers buy in huge bulk from the manufacturers and then distribute the goods in smaller lots to the retailers. Stone Inc. is a wholesaler as is a link between the manufacturers and the retailers. It is buying goods and then selling it to gift shops.
Retailers sell the goods to the customers. Thus they are the first hand contact to the customers. Stone Inc. is selling the goods to shops and not to customers thus it is not also a retailer.
Service firms do not deal in goods; rather they provide utility and facilities to the customers and are in direct contact with the customers. Stone Inc. is not providing any service.
Answer:
Costs:
It is the amount of money spent on goods and services to obtain future benefits. Management process requires costs to be accumulated and assigned to products.
Accumulating cost means that
c. Cost must be measured and tracked.
Explanation:
Accumulating costs is a system to collect information about costs. Linking of cost to cost object and allocation to units is called assignment of costs. Thus, (b) (d) are incorrect. Point (e) is incorrect as transferring of expired cost from balance sheet to income statement is not accumulation of costs. Accumulating costs requires costs related to a single object to be pooled together. Thus, (a) is incorrect.
Answer:
Accumulating cost is the way the costs are recorded in the financial books. This is a measure by which the accountants using the accounting principles measure the costs incurred and then record the same in a typical manner. This helps the management to make decisions in easy and convenient manner as the accumulated cost shows that how much is spend in a particular period of time.
Assigning cost is the way the costs are allocated to specific items. This can be done in number of ways, where some give accurate results whereas the others are easy to calculate. This helps the management to know how much exactly is spend on the particular item.
Let us explain the same with the help of an example:
Say an organization receives electricity bill for a month of $200. Next month, it again receives a bill of $500.
Now at the end of two months the total cost incurred on electricity bill is $700. This is accumulated cost. The bill gets on added for the accounting period under the same head of electricity and the management knows at the end of each month how much total electricity has been used up in the organization. This is how costs are accumulated.
Next the management has to decide how much electricity has been used by the each department in the organization. Say, if there are two departments in the organization, one the factory and other sales department. Now the easy way to assign the electricity bill to both the departments is to divide the total bill amount by the number of departments equally. The other accurate but tedious measure would be to calculate the per unit consumption of each department and then dividing the total bill amount in the ratio of the units consumed by each department. This is how costs are assigned.