BUS 251 Chapter Notes - Chapter 7: Gross Margin, Consignor, Consignee

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 251
• Professor: Susan Bubra

Document Summary

Largest current assets converted to cash: investor and creditors. Choose suppliers: timely basis, location (order date + delivery date) Consider amount and price: not too much (storage fee, spoil, damage, obsolescence), not too little (stock out) Fob shipping point: buyers own inventory when it leaves seller premise. Fob destination: buyers own inventory when it arrives buyer premise. Seller recognize revenue when inventory has risk and reward transfer and no involvement. Which systems to choose: complete, timely infor: on hand, reorder (high demand/ seasonal/ short life items), monitor price strategies, count shrinkage cost of perpetual system is expensive might not suitable for small business. Specific identification: no different btw inventory system => unique, high price, products => no exactly purchase cost and units of the product. Weighted average: homogeneous products => lower gross margin + ei + net income. First in, first out: homogenous products, physical flows of goods => higher gross margin + ei + net income.