Business Arithmetic — Entrepreneurship STD 12 Commerce — Question
CBSE BoardEnglish MediumSTD 12 CommerceEntrepreneurshipBusiness Arithmetic3 Marks
Question
Explain the various categories of inventory.
✓
Answer
In a manufacturing firm inventories work as a link between production and sale. The three categories of inventories are as follows:
Raw materials: Those materials which have purchased and stored in a godown at a particular time for future production.
Work in progress: These are the goods in the course of manufacture. It means goods which are likely to be in various stages but not reached to t the final stage. It consist of material, labour and factory expenses applied to the unit up to the last stage. In these the goods are in semi-finished stage.
Finished goods: These are the goods reached at the final stage of production process. These goods are ready for sale. The size of three types of inventories depends upon varying nature of their business.
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