CA Inter P4 · Chapter 2 · Question 4 of 12
A material has a re-order level of 5,400 units and a re-order quantity of 4,000 units. Minimum weekly usage is 500 units and the minimum lead time is 3 weeks. The maximum stock level is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) 7,900 units
Explanation
Maximum stock level = re-order level + re-order quantity - (minimum usage x minimum lead time) = 5,400 + 4,000 - (500 x 3) = 9,400 - 1,500 = 7,900 units.
More Material Cost MCQs
- Q6Using the same data (opening stock 400 kg at ₹30, purchase 600 kg at ₹33, issue of 700 kg after the purchase), what is the value of…
- Q7Opening stock of raw material was ₹1,20,000, closing stock ₹1,80,000 and material consumed during the year ₹9,00,000. The inventory…
- Q8Under ABC analysis of inventory, the 'A' category generally consists of items that are:
- Q9Loss of material arising from an abnormal cause, such as theft or fire in the stores, should be treated in cost accounts by:
- Q10A company purchases 5,000 kg of a chemical at ₹42 per kg and pays freight inward of ₹6,000. A normal loss of 4% occurs due to evaporation…