Explain Why Measuring Product Cost For A Manufacturing Entity Is More Complex Than Measuring Product Cost For A Retail Toy Store?

1 Answers

Samantha Mitchell Profile
Retail costs for a toy store mean the products are already manufactured. In a manufacturing facility there is a need to bring in many different items to complete the manufacturing of the product.

  • Manufacturing
In a manufacturing entity there are more product costs to consider. It is not just about one product cost in the business. There are many different products that need to be accounted for, because manufacturing an item usually means two or three products are used. All of the items have to be accounted for, and one also has to get enough products to manufacture more than one product. Given all of this, it is more complex than how retail costs in a toy store will work.

  • Retail
The products that are already at retail level are manufactured. They have been completed and now is the time to determine what each one will sell for. The manufacturer has already provided their costs and added a bit to their profit margin. When it reaches a toy store, one is going to determine what the product cost is based on what needs to be made in profit for the store. They already know the purchase cost and there is the need to include labor, overheads and other expenses spread over the inventory in the store. All the costs are known entities in a retail situation.

It makes it simpler to measure the costs at this juncture than when one is still in need of finding cheap materials to manufacture products over ones that are already made and being purchased for a store. It makes it complex when there are unknown quantities to measure in a business.

Answer Question

Anonymous