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

Compute the net cash used, Martinez Corporation engaged in the following ca...

Martinez Corporation engaged in the following cash transactions during 2012. Sale of land and building $186,710 Purchase of treasury stock 42,130 Purchase of land 39,130

Discount model of stock valuation-ddm, Value one stock using the dividend d...

Value one stock using the dividend discount model of stock valuation with two periods of constant growth (not the simple one period growth model).  See chapter 18 of the textbook

Calculate the average cost, Seventeen new bathing suit stores enter the San...

Seventeen new bathing suit stores enter the Santa Barbara market, joining the seven that already existed. As a consequence, the demand schedule facing Swim N Style (and all other s

Cash flow statement, In this section we have tried to develop the concept o...

In this section we have tried to develop the concept of flow of funds inside the organization. Starting along with the funds requirement for an organization, we have tried to trace

Wages and salaries, Given the information that follows, prepare a cash budg...

Given the information that follows, prepare a cash budget for the XYZ Store for the first six months of 2010. All prices and costs remain constant. Sales are 90% for cre

Flexible Budget, Flexible budgeting is a reporting system wherin the

Flexible budgeting is a reporting system wherin the

Cost sheet, 10% of the finished castings were to be defective in manufactur...

10% of the finished castings were to be defective in manufacture and were rectified by expenditure of additional works overhead charges to the extent of 20% on the proportionate di

Last in first out or lifo, Last in first out or LIFO LIFO is based upo...

Last in first out or LIFO LIFO is based upon the assumption such the stock purchased last is issued first. Stock valuation should here be based upon the prices ruling on acqui

Determine the joint cost, Determine the Joint Cost A company produces ...

Determine the Joint Cost A company produces three products, Y1, Y2, and Y3 in the similar process.  The data below reflects average monthly results as:

Process losses, Process Losses Most manufacturing processes result in ...

Process Losses Most manufacturing processes result in several portion of the raw materials utilized not being transformed into a reliable half losses.  These losses may take t

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