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

Method of measuring costs associated with production, Which method of measu...

Which method of measuring costs associated with production is more widely used in practice A. Normal Costing  B. Actual Costing  C. Both are used equally  D. Neither one

Absorption costing, Absorption Costing, Marginal Cost and Marginal Costing ...

Absorption Costing, Marginal Cost and Marginal Costing Absorption costing is most often utilized for routine profit reporting and must be utilized for financial accounting rea

Differential analysis, West Industries is a highly decentralized corporatio...

West Industries is a highly decentralized corporation with independent operating divisions. Each division is evaluated and rewarded based on its total net income. One of the divisi

Determine the cost of the finished goods inventory, Manufacturing statemen...

Manufacturing statements and cost behavior  Tampa Foundry began operations during the current year, manufacturing various products for industrial use. One such product is light-g

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 £

Cost sheet, what is a cost sheet? what are its advantages?

what is a cost sheet? what are its advantages?

Standard cost and standard costing, Standard Cost and Standard Costing ...

Standard Cost and Standard Costing To effectively control the costs of a certain organization, we require a yard stick to measure the real performance against. Traditionally,

What is the contribution margin ratio, Sales: $168,042 Variable Costs: $63,...

Sales: $168,042 Variable Costs: $63,987 Total fixed expenses:$ 75,794 Number units sold per year: 6367 1. What is the contribution margin per unit of your product or service? 2.

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