Stock control and its level, Cost Accounting

Assignment Help:

Stock control and its Level

Management must formulate decisions regarding to the control of stock levels along with a view to minimizing the cost of the company whereas achieving more efficiency in the material's availability to fulfill planned usage necessities. Consideration must be given to the specified control levels as:

a) Re order quantity and Notice the re-order quantity is not essential the EOQ

b) Minimum stock level

c) Re-order level

d) Maximum stock level

a) Minimum stock level

It is the level below that stock must not fall. It is really a base or buffer stock level. If stock reduces below such point, so there is a danger of stock out.

"Minimum stock level = Reorder level - (Normal consumption x normal reorder period)"

b) Maximum stock level

It is the upper limit above which stock must not be permitted to rise. All material to be maintained in store must contain a maximum level and stock should not be permitted to go beyond such level

"Maximum stock level = Re-order level +re-order Quantity - (Minimum consumption x minimum re-order period)"

c) Re-order level

Is a point which lies among maximum and minimum stock levels at that purchase orders should be placed to ensure such goods ordered are obtained before the minimum stock level is achieved? This is the level of stocks at that replenishment should be made to ignore a stock-out.

"Re-order level = maximum consumption X maximum re-order period"

d) Re-Order quantity

It is the quantity of stock ordered one time the re-order point is achieved. The quantity is like to minimize stock costs getting into consideration the cost of holding stocks and creating a order. It is regarded also like the Economic Order Quantity or EOQ.  It is computed like follows as:

EOQ = √(2DCO/Ch)

Whereas:  D is the annual demand as or knits

               Co is the cost of making one sequence

               Ch is the holding cost per unit per annum


Related Discussions:- Stock control and its level

Prepare a balance sheet for schubert products inc, Balance Sheet Preparatio...

Balance Sheet Preparation with a Missing Element The following data are available for Schubert Products Inc. as of December 31, 2012. Cash . . . . . . . . . . . . . . . . . . .

Materials variance, The following standard costs were developed for one of ...

The following standard costs were developed for one of the products of Ferrars Company: Standard Cost Card Per Unit Materials: 4 feet x $14.25 per foot $ 57.00 Direct labor: 8 hour

#title.Case Study., A retail dealer in garments is currently selling 24000 ...

A retail dealer in garments is currently selling 24000 shirts annually. He supplies the following details for the year ended 31st December,2007. Rs Selling Price per shirt

Outstanding expenses, Expenses are usually recorded only while they are pai...

Expenses are usually recorded only while they are paid. The failure to record unpaid expenses in the accounts outcomes in an understatement of which expense and also an understatem

Case study, Managerial ACCT 2 Ulrich Framing is well known for the quality ...

Managerial ACCT 2 Ulrich Framing is well known for the quality of its picture framing. Lucinda Ulrich, CEO, believes that the number of linear feet or framing used is the best is t

Describe the concept of full cost recovery with illustrative, Describe the ...

Describe the concept of full cost recovery with illustrative examples.

Marginal cost, Marginal Cost Marginal cost is the change in a firm's co...

Marginal Cost Marginal cost is the change in a firm's cost of production. It is related to a unit change in its output, or the added cost of producing the next unit. The margin

allocation of cost, looking for a dissertation of cost allocatio

looking for a dissertation of cost allocation

Direct materials total variance, Direct Materials Total Variance Direc...

Direct Materials Total Variance Direct materials total variances refer to the difference between the standard direct material cost of the actual production volume and the actu

Find the total landed cost, What conclusion can you draw when comparing the...

What conclusion can you draw when comparing the total landed or delivered cost to the original purchase cost? What does this suggest about the importance of supply chain managem

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd