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INVENTORY CONTROL DECISIONS
Factories, workshops, engineering departments handle raw materials used in the manufacture of products. The main objectives in handling these materials are:
1. Maximum customer's service2. Minimum possible investment on materials, handling costs etc.3. Avoid shortages as far as possible so that production is not stopped or customer's goodwill is not lost.
Some of these objectives are basically in conflict and require a scientific approach to get an optimal solution in order to earn maximum profit for a given investment. Inventory control is the study including `Material Management' and the associated costs in such a way that the total cost is kept minimum for a given investment.
After determining the amount of working capital as in above, a specific amount say 5 percent or 10 percent may be added to cover contingencies. This is to be noted that facts depen
What is Direct material cost variance It can be defined as the difference between the standard costs of direct material specified and the actual cost of direct material used.
Incremental budgeting Incremental budgeting uses a budget prepared using a last period budget or actual performance as a base with incremental amount asses for the new budget p
What are the Features of zero base budgeting 1) Manager of a decision unit has to completely justify why there should be at all any budget allotment for his derision unit. This
reasons for favourable or adverse variances i.e. prise usage, mix, yeild
Material storage Sophisticated mathematical models to control economic buying, and systems control the flow of material may all be for naught if the obvious-efficient storekeep
Determine the tyoes of Cost centre Cost centre can be of two kinds: 1. Impersonal cost centre: consisting of a location or item of equipment (or group of these) like machi
WHAT IS PRIME COST?
The std cost of chemical mixture~PQ is as follows: 40% of material P @rs.400/kg 60% of material Q @rs.600/kg A std loss of 10% is normally anticipated in pdn. The followinng parti
Characteristics of irrelevant costs
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