Costing - Study Mode
[#156] Under ABC method of material control, the material are classified according to __________.
Correct Answer
(A) its value
Explanation
Solution: Under ABC method of material control, the material are classified according to its value. The ABC analysis suggests that inventories of an organization are not of equal value. Thus, the inventory is grouped into three categories (A, B, and C) in order of their estimated importance.
[#157] This is a point at which the store keeper should initiate purchase requisition for fresh supply It is ________.
Correct Answer
(C) reorder level
Explanation
Solution: This is a point at which the store keeper should initiate purchase requisition for fresh supply It is reorder level. Re-order level is a level of material at which the storekeeper should initiate the purchase requisition for fresh supplies. When the stock-in-hand comes down to the re-ordering level, it is an indication that an action should be taken for replenishment or purchase.
[#158] This is a level at which normal issue of material are stopped, but issued under special condition It is ________.
Correct Answer
(C) danger level
Explanation
Solution: This is a level at which normal issue of material are stopped, but issued under special condition It is danger level. Danger level is a level of fixed usually below the minimum level. When the stock reaches danger level, an urgent action for purchase is initiated.
[#159] Annual usage is 6000 units @ Rs 20 per unit Cost of placing an order is Rs 60 and annual carrying cost of one unit is 10% of inventory value EOQ = __________.
Correct Answer
(A) 600 units
[#160] Variable costs change . . . . . . . . with change in output.
Correct Answer
(A) proportionately