ECONOMICS

Detailed explanation-1: -Ordering costs are the expenses your company incurs to purchase and receive the products it stocks in its inventory. These ordering costs can include shipping fees, unexpected transportation costs, inspection fees and other expenses necessary to acquire inventory products.

Detailed explanation-2: -Overhead refers to the costs of running a business that are not directly related to producing a good or service. These costs can be fixed, such as rent, or variable, such as transport costs. They can also be semi-variable, such as utilities.

Detailed explanation-3: -Transportation-in costs, which are also known as freight-in costs, are part of the cost of goods purchased. The reason is that accountants define “cost” as all costs necessary to get an asset in place and ready for use.

Detailed explanation-4: -Transportation-in is the freight cost incurred by the buyer to have purchased goods delivered. This cost classification can include freight insurance costs and customs duties.