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

Select the correct answer, If fixed costs are $743,122 and variable costs a...

If fixed costs are $743,122 and variable costs are 69% of sales, what is the break-even point in sales dollars? Select the correct answer. A. $512,754 B. $2,397,168 C. $1,255,876 D

Assignment, What is the major value of the weighted cost of capital calcula...

What is the major value of the weighted cost of capital calculation for the firm?

Calculate the allocations and totals, A company wishes to devise a fair mea...

A company wishes to devise a fair means of allocating funds to its four main departments, namely Accounts, Production, Sales and Transport. The total allocation is to be £100,000.

Determine the original budget line , The state legislature has voted to dev...

The state legislature has voted to develop a grant-in-aid policy to try and induce local communities to devote more resources to improving their infrastructure. Town O = Has a

Explain inaccurate financial statemnts, Generally Accepted Accounting Princ...

Generally Accepted Accounting Principles (GAAP) are guidelines for companies to follow as they prepare and issue financial statemnents. Let's start by getting an understanding of

Debt-equity ratio, Allie forms Broadbill Corporation by transferring land (...

Allie forms Broadbill Corporation by transferring land (basis of $125,000, fair market value of $775,000), which is subject to a mortgage of $375,000. One month prior to incorporat

What is the amount of cost of goods manufactured, Wayne Company's beginning...

Wayne Company's beginning and ending inventories for the month of June were as follows: June 1 June 30 Work in progress $145,000 171,000 Finished Goods 85,000 78,000 Production

Advantages and disadvantages of designing an ic, Discuss the advantages and...

Discuss the advantages and disadvantages of designing an IC using VHDL and synthesis compared with the traditional design approach using schematic capture, simulation and layout.

Uses of funds, Dividends                                                   ...

Dividends                                                                                        ................ Non-operating losses not passed through P and L A/c

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