Differentiate between integration and economics of scale

Economies of Scale are the cost advantages that a company acquires because of
growth and expansion. The average cost to produce a product decreases as the
output is increase.
Economic integration is an arrangement created between different regions to
promote trade and flow of goods by elimination of tariffs and trade barriers and
coordinating fiscal & monetary policies to promote trade. This encourages
companies to produce goods in which they have a comparative advantage
Differentiate between price elasticity of demand and cross price elasticity
of demand.
Price elasticity of demand is the sensitivity of demand to changes in price level.
Greater the price elasticity the greater will be the increase or decrease in demand
with change in price. For example when the price of deodorant increases by 20%
the demand falls by 60%.
Cross price elasticity of demand measure the sensitivity of demand of one good to
changes in price of another good. It usually is positive for complementary goods.
For example like cars and petrol. If the price of petrol increases, the demand for fuel
inefficient cars will simultaneously decrease.
Differentiate between insurance premium and credit control.
Insurance premium is the amount of money that is charged by an insurance
company for taking on risk of another individual or company. In case an adverse
event occurs the insurance company pays a lump sum to the party which had been
paying the premium for coverage. Premium is paid either in installments or lump
sum during the policy period.
Credit control involves a comprehensive system of maintaining the collectibles and
receivables of a company by regulating credit extended to customers and collecting
revenue on time thus decreasing the amount of bad debts (account receivables
which are written off as uncollectible) and increases sales revenue. The credit
worthiness of potential borrowers are judged and compared.

Explain, compare and contrast principles, main activities involved in cost

accounting, financial accounting and financial budgeting.

Financial accounting:

It aims to obtain the results of the accounting year by preparing financial

statements like Profit & Loss Account, Balance Sheet and Cash flow
Statements.
It presents a true and fair picture of transactions, profit & loss and financial
position of the company on a given date. This enables various stakeholders to
undertake rational decisions while deciding which direction the business
goes.
COST ACCOUNTING:

Cost accounting specifically aims to compute the costs incurred in production

of a good and services and accordingly helps to control and reduce costs thus
increasing profitability.
It is an internal reporting system meant to aid the management to aid in the
decision making process.
Basic cost elements that are taken into consideration are raw materials, labor
and overheads.
FINANCIAL BUDGETING:

It involves creating long and short term financial plans which detail
projections of profit loss and costs. It incorporates budgeting strategies by
preparing a budgeting balance sheet , cash flow and income statement.
It helps in comparative analysis of the performance between periods and
helps to isolate issues that might be decreasing profitability and uncover
operations which are improving performance.
It serves as a companys blueprint for operations and measuring how well the
company is achieving its long term goals and objectives.

Describe the duties, importance of store management and stock control

department.
Store management is important as all companies buy and sell goods and services.
To sell companies need to maintain a small quantity of stock in their inventory. If the
inventory is not managed properly, it can lead to scenario where there is too much
stock leading to obsolesce or if stock is too low, the company might not be able to
avail the opportunity to earn profits by catering to demand. Thus it is important to
have an efficient and proper system of managing stock.

Store management encompasses all activities related to store keeping and control
of the flow of stock, ensuring it is performed efficiently and economically. In many
larger companies it also includes the recruitment and training of personnel involved
in this process. There are mainly four types of stock :

Raw materials and components

Work in Progress
Finished goods
Consumables.

Stock Control comprises the administrative aspect of store management. It involves:

1. Ensuring that the correct type and quality of stock is available for production,
distribution and sale and is available when required.
2. Ensuring stock flows through in the correct sequence be it FIFO (first in first
out method) or LIFO (last in first out). Stock is not allowed to run obsolete.
3. Maintaining records detail the flow of stock in and outside the company.
Monitoring the movements and keeping records of the items present and the
orders.
4. Pricing and valuing the stock.
5. Measuring the level of stock so to access the purchase or sales orders that
have to be made.
Store Department has a nonproductive function in the company but the Sales
and Production department are directly involved in revenue generation. The
production department manufactures the goods and the Sales department sells
the goods.
What the store department does is that it increases the efficiency of the
company by working in coordination with the production & sales departments.
The store department ensures all the raw materials are available for continuous,
uninterrupted production which requires proper & adequate warning about future
demand in terms of quality, types and quantities.

Explain key issues in location, design, layout and construction of store

buildings.
The three main aspects of the store management is acquisition, control &
movement.
Of the key challenges is the design and infrastructure of the store. It is important for
the infrastructure to be strong and protect the stock from dust, dirt and corrosion
since these factors can degrade the quality of the materials store. Keeping the stock
in a derelict store is equivalent to keeping it out in the open. It is essential that store
has proper lighting, doors, heating and cooling systems.

Not just any available space can be used as a store. It is important to keep in mind
that the location isnt crowded and is spacious. Moreover the distance should be
optimal so that the stores/logistic personnel can easily procure and deliver items.
Locations which are at great distances increase delays and time consumed. The
probability of items breaking on the way or getting damaged also increases.
The store should have limited accessibility. Because if it is open to anyone it limits
the ability for materials to be properly handled and effectively managed. This
results in stocks outs and incurring more costs in acquiring more materials.
Physical layout of the store if not proper can bring in potential inefficiencies and
costs. It is important that the layout encourages free flow of materials. Key issues
usually are obstacles or dead ends which limit movement or simply being too
crowded which wastes both time and money.