Stock Valuation: Costs, Logistics, and Packaging

Stock Valuation

Purchase price and manufacturing cost: Purchase Price: This is the cost that includes the supplier's price and all additional costs incurred until the merchandise is in the buyer's stock. These expenses are:

• Transportation: the cost of transporting goods to the warehouse. This expenditure is called postage or freight. Also, include the costs of loading and unloading if these are borne by the carrier.
• Insurance: The goods to be transported can be insured to prevent possible incidents: breakage, shortages, accidents, etc. According to the market value, the insurance premium will be higher or lower.
• Packaging: the cost of the goods' packaging.
• Customs duties: when the goods come from a non-EU country, you may have to pay tariffs (taxes). In addition, you may have to pay some fees to customs agents.

It is possible that none of these costs are known at the time of purchase and not reflected in a single bill. For example, a company can buy a machine from another and, at the same time, engage the services of transport with a third party.

The purchase price excludes VAT, although the latter appears on the invoice issued by the supplier, as companies can usually deduct the VAT, meaning the company recovers the VAT they have paid. Therefore, we must not consider this amount in the purchase price.

If the VAT is not deductible, meaning that the company cannot recover the money, it becomes part of the purchase price, as it ultimately increases the purchase price.

Direct and Indirect Costs

Direct costs are attributed directly to the production process. The term 'attribute' denotes the total cost sharing of production between the units produced. The total cost is calculated by adding the costs incurred in each of the departments that have been directly involved in production. These costs are proportional to the volume of production: as output increases, so do direct costs.

Indirect costs: these are not directly attributable to a product, section, or department, because it is unknown to what extent they have influenced the actual production of each unit. Anyway, they are essential to develop these products and therefore must be attributed in some way to the unit cost.

Logistics

Efforts of logistics: the logistics network includes inventory, transportation, purchasing, warehouse, procurement, distribution, information systems, and outsourcing.

Packaging

How to protect the goods for transport. The concept refers to the product container and is closely related to the marketing concept, notwithstanding that it is never enough for transport, especially when it comes to short-range transport.

Packing includes all actions aimed at achieving good coverage for the exterior, to protect it from inclement weather and other hazards during transportation and make it manageable and easily identifiable for all those involved in shipping and receiving.

Types of Containers

• Primary container: Container sales or the consumer unit packaging conceived to constitute at the point of purchase a single item for the consumer or end user.
• Secondary container: Container or packaging group: all base plates designed to be at the point of purchase a grouping of a number of sales units, whether it will be sold as such to the end user or consumer as if used only as a means of restocking the shelves at the point of sale, the product can be separated without affecting the characteristics.
• Tertiary container: Packaging or transport packaging, all packaging, including pallet transport, designed to facilitate handling and transport of a single item or several collective base plates to prevent physical handling and transport damage.

Loading Units

• Charging unit: Is a set of articles or packages grouped by one or more mechanized means, constituted and proper handling, transportation, stacking, and storage as a unit.
• Homogeneous loading unit: A unit load consists of packages that have the same dimensions or shapes.

Functions of Packaging

Identifying functions of packaging the goods: in the distinctive packaging are made that reveal the contents of the consignment, thereby facilitating their identification in order to locate origin and destination, customs steps, etc.

Information about the goods: similarly, the packaging can provide information on the nature of the goods being transported.

Handling of the goods: the packaging is an appropriate means to facilitate handling of goods in loading, unloading, or transhipment. Using packaging not only saves time in these operations but also reduces the necessary staff.