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 the journal entries to record depreciation, Moore Corporation follo...

Moore Corporation follows a policy of a 10% depreciation charge per year on all machinery and a 5% depreciation charge per year on buildings (the corporation uses the nearest full

EOQ , formula for economic order quantity

formula for economic order quantity

ASSIGNMENT ON HAMPSHIRE PROJECT, tHE FIRST SECTION ASSIGEMTN ANSWER FOR HAM...

tHE FIRST SECTION ASSIGEMTN ANSWER FOR HAMPSHIR COMPANY DECISIONS

Trypanosoma, Place a prepared slide of Trypunosoma under tlic microscope an...

Place a prepared slide of Trypunosoma under tlic microscope and focus it under low power, You will observe large number of tiny spindle-shaped trypanosomes lying in the plasma alll

Cost units - terms used in cost accounting, Cost Units - Terms Used in Cost...

Cost Units - Terms Used in Cost Accounting It is the quantitative units of the service or product in relation to those costs are ascertained. The cost unit will be determined

Calculate the total direct labor cost & labor wage rate, Peter Coffin and P...

Peter Coffin and Paul Bearer own The Grave Undertaking, Inc. and their firm uses a predetermined overhead rate to apply overhead to the production of custom-built coffins.  They us

Taxable transfers, Greta Grantor made $1 million of taxable gifts in 2009, ...

Greta Grantor made $1 million of taxable gifts in 2009, the only taxable gifts she made prior to this year.  Greta was married on January 2nd of this year to Gerard Gold digger. De

Calculate the retained profit, Harriet Ltd is a trading company set up a nu...

Harriet Ltd is a trading company set up a number of years ago with 5,000 £1ordinary shares issued at par. In order to expand the production facilities it needs to raise a further £

Manufacturing Costs, Is there a way to figure out labor cost and factory i...

Is there a way to figure out labor cost and factory inventory when no direct information regarding them is available.

Constant gross margin rate, Constant Gross Margin Rate This method ass...

Constant Gross Margin Rate This method assumes that every product contributes an equal percentage of gross profit for every shilling of sales. It works back from gross margin

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