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

Show the break-even charts, Q. Show the Break-even charts? Refers graph...

Q. Show the Break-even charts? Refers graphically profit and losses at different levels of sales volume achieved. When sales revenue is greater than total cost it m

Marginal costing, sums with solution of marginal costing

sums with solution of marginal costing

Internal users of accounting information, Describe the ways in which the ne...

Describe the ways in which the needs of internal and external users of accounting information are the same and different.

Labour variances, Labour Variances From our basic data, we can ca...

Labour Variances From our basic data, we can calculate the labour variances as given as: i. Labour Rate Variance = (AH x AR) - (AH  x SR)

What is the breakeven unit variable cost, Early customers at Graffiti Week ...

Early customers at Graffiti Week balk at the price for Moondoggie Reserve. The marketing department at DFW, Jolene, conducts some research that suggests Stanislaus county residents

Pv ratio, Do I use the contribution per unit and the total sales for the de...

Do I use the contribution per unit and the total sales for the department in order to calculate the p/v ratio for a department

EXPECTED CASH COLLECTIONS.PRACTICE QUESTIONS, WORKED EXAMPLES OF EXPECTED C...

WORKED EXAMPLES OF EXPECTED CASH COLLECTIONS PATTERNS

Bases of cost classification, Bases of Cost Classification These vario...

Bases of Cost Classification These various bases of cost classification are summarized in the diagram underneath as: Here, we will usually refer to either of these ter

Assumptions of break even analysis, ASSUMPTIONS OF BREAK EVEN ANALYSIS ...

ASSUMPTIONS OF BREAK EVEN ANALYSIS 1. Fixed costs for all time remain constant. 2. All costs are divided into fixed and variable costs. 3. Selling price will not alter de

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