Material control questions for cost students
Cost
Sheet Problems
(a)
A manufacturer uses 200 units of a component every
month and he buys them entirely from outside supplier. The order placing and
receiving cost is Rs.100 and annual carrying cost is Rs.12. From this set of
data calculate the Economic Order Quantity.
(b)
P.
Ltd. uses three types of materials A, B & C for production of X, the final
product.
The relevant monthly data for
the components are as given below:
Calculate for each component:
(a) Re-order level
(b) Minimum
level
(c) Maximum
level
(d) Average
stock level
c. From the following data for the
last 7 days, compute the Average Stock Level for a component:
Time-lag
procurement of materials: Maximum 4 days. Minimum 2 days. Re-order quantity =
1,500 units.
(ii) You
also ascertain the Danger Stock Level from the above information.
d. Compute
the re-order level, minimum level, maximum level, average stock level for
components A and B based on the following data:
e. ZEE is
a product manufactured out of three raw materials M, N and Q. Each unit of ZEE
requires 10 kg, 8 kg and 6 kg of M, N and Q, respectively. The re-order levels
of M and N are 15,000 kg and 10,000 kg, respectively, while the minimum level
of Q is 2,500 kgs. The weekly production of ZEE varies from 300 to 500 units,
while the weekly average production is 400 units.
ADVERTISEMENTS:
You are required to compute:
(i) The
minimum stock level of M.
(ii) The
maximum stock level of N; and
(iii) The
re-order level of Q.
f. The following additional data are given:
In a factory component A is used as follows:
Normal
usage – 50 kg per week
Minimum
usage – 25 kg per week
Maximum
usage – 75 kg per week
Re-order
quantity 300 kg.
Re-order
period 4 to 6 weeks.
Calculate for component A:
(i)
Re-order level,
(ii)
Maximum level.
(iii)
Minimum level; and
(iv)
Average stock level.
g. Find the Economic Order Quantity from the following data:
Find out the Economic Order Quantity and Order
Schedule for raw materials and packing materials with the following data given
to you:
1. Cost of
ordering: Raw Materials = Rs. 1,000 per order
Packing
Materials = Rs. 5,000 per order
2. Cost of
holding inventory: Raw Materials = 1 paisa per unit p.m.
Packing
Materials = 5 paise per unit p.m.
3.
Production rate: 2,00,000 units per month
h. Company
uses 5,120 units of a component in a year. The purchase price per unit of the
component is Rs. 5.00 and the carrying cost including interest is estimated at
20% of the average inventory investment on annual basis. The cost of placing an
order and processing the delivery is Rs. 10.
(a)
Ascertain the economic order quantity and the number of orders each of the
economic order quantity, to be placed for the component in a year.
(b)
Assuming that the average daily consumption of the above component is 14 units
and that the normal lead time is 15 days, calculate the ordering level for the
component, where safety stock is considered to be equal to 25 days’
consumption. State why ordering level is fixed.
The following information is available for the month of January
1998:
Prepare
Store ledger showing base stock method of inventory valuation with LIFO method
of pricing material issues. The normal base stock quantity is 500 units.
i.A factory uses a particular raw material. There are three processes A,
B and C. The data relating to inputs, outputs and rejections during the month
of April are given below:
|
Inputs (in pieces)
(Including opening W.I.P) |
Rejections
(in Pieces) |
Output
(in pieces) |
|
|
A
|
18,000
|
6,000
|
12,000
|
|
B
|
19,800
|
1,800
|
18,000
|
|
C
|
20,400
|
3,400
|
17,000
|
Determining what should be inputs and Process A when final product
transferred from process C is 1,000 pieces.
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