Material Cost
50 Questions (50 Marks)
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1- Raw materials are directly identifiable as part of the final product and are classified as ……………
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2- Inventory consists of …………………
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3- ………………indicates the level of each particular item of stock at any point of time.
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4- Inventory held for sale in the ordinary course of business is known as…………..
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5- ……………is a list of materials, with specifications, material codes and quantity of each material required for a particular job, process or production unit.
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6- Which of the following method is based on the assumption that, latest consignment of a materials or goods manufactured are exhausted first and the closing stock is valued at the cost of earliest lot in hand?
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7- ……………are those cost, which can be identified and traceable to particular product or costing unit or cost centre.
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8- Wood used in production of tables and chairs, steel bars used in steel factory etc. are the examples of …………..
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9- Under ……..of inventory valuation, the historical cost of inventory is estimated by calculating at selling price and then deducting an amount equal to estimated gross margin of profit on such stocks.
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10- When materials are unloaded, the warehouse staff check the material unloaded with the delivery note. Then the warehouse staff prepares a ………, a copy of which is given to the supplier’s carrier as a proof of delivery.
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11- ……….. are those items, which are moving at a slow rate and this may arise due to general depression in demand due to keen competition.
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12- CIMA defines……………as, “an internal instruction to a buying office to procure goods or services.”
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13- In which of the following position is done before the transaction takes place? *
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14- …………are those items which are not moving temporarily but their movement is expected shortly. *
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15- When materials are delivered, a supplier’s carrier will usually provide a document called ………to confirm the details of delivery.
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16- ………….represents the unusable loss, which can be sold. It is a residue, which is measurable and has a minor value.
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17- If small quantities of direct material used in the end product like gums and threads are used in binding books then it may be categorized as………………….
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18- Under which of the following method of inventory valuation, the closing inventory is valued at the lowest possible price?
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19- Bill of material acts as an authorization to the …………in procuring the materials and the concerned department in material requisition from the stores.
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20- …………….records the quantity details, rates and values of stock movements.
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21- ……………..are that portion of the process loss, which can be converted into a finished product by incurring more material and labour expenses.
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22- CIMA defines……………….as, “the recording as they occur of receipts, issues and the resulting quantity of quality and value”.
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23- Which of the following technique can be used for inventory control?
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24- ………………is an optimum quantity of material to be ordered every time an order is placed. EOQ may be defined as that quantity of purchase which minimizes material order cost and material carrying cost.
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25- The model and formula of EOQ was developed by …………..in 1913.
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26- ……………..are those materials or components which are so damaged in the manufacturing process that they cannot be repaired or reconditioned.
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27- Under which of the following plan the analyst lays down a minimum and maximum quantity for each stock item keeping in view its usage, requirements and margin of safety required to minimize risk of stock outs?
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28- Under ……………, a pre-determined price is fixed for valuing each material.
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29- ………………..may be defined as that quantity of purchase which minimizes material order cost and material carrying cost.
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30- ……………..are goods/ units which can be converted into a finished product by incurring more material & labour expenses.
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31- Under………………….a continuous record of receipt and issue of materials is maintained by the stores department and the information about the stock of material is always available.
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32- Recorder Level = Safety Stock + …………….
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33- Which of the following is required in order to calculate EOQ?
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34- Re-order Level is also known as…………….
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35- …………….purchase means the purchase of goods or material such that delivery immediately precedes their use.
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36- (Maximum usage – Average Usage) × Lead Time = ?
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37- Which one out of the following is not an inventory valuation method?
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38- The average annual consumption of material is 20,000 kg at a price of Rs. 2 per kg. The storage cost is 16% on average inventory and the cost of placing one order is Rs. 50. How much is to be purchased at a time?
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39- Annual consumption of material – 4,000 units, Ordering Cost – Rs. 5, Cost per unit – Rs. 2, Storage & carrying cost – 8% p.a. The Economic Order Quantity for the item is …………
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40- The annual demand of a certain component bought from the market is 1,000 units. The cost of placing an order is Rs. 60 and the carrying cost per unit is Rs. 3 p.a. The Economic Order Quantity for the item is ……………
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41- A manufacturer requires 9,600 units of a certain component annually. This is currently purchased from a regular supplier at Rs. 50 per unit. The cost of placing an order is Rs. 60 per order and the annual carrying cost is Rs. 5 per price. Annual ordering plus carrying cost = ?
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42- A publishing house purchases 2,000 units of a particular item per year at a unit cost of Rs. 20. The ordering cost per order is Rs. 50 and the inventory carrying cost is 25%. How will be the total cost if company decides to buy in EOQ?
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43- A factory requires 1,500 units of an item per month. The cost of each unit is Rs. 27. The cost per order is Rs. 150 and inventory carrying charge works out to 20% of average inventory. Supplier offers 2% price discount on a minimum supply of 1,200 units. How much money will be saved by accepting suppliers offer?
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44- A firm requires 16,000 units of a certain component which it buys at Rs. 60 each. The cost of placing an order and following it up is Rs. 120 and the annual storage charges works out to 10% of the cost of the item. To get maximum benefit the firm should place order for ………….at a time.
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45- The average annual consumption of material is 20,000 kg at a price of Rs. 2 per kg. The storage cost is 16% on average inventory and the cost of placing one order is Rs. 50. What is the time gap between two orders?
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46- G Ltd. produces a product, which has a monthly demand of 4,000 units. The product requires a component X, which is purchased at Rs. 20. For every finished product, one unit of component is required. The ordering cost is Rs. 120 per order and the holding cost is 10% p.a. EOQ = ?
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47- In a Company the weekly minimum and maximum consumption of Material –A are 25 and 75 units respectively. The reorder quantity as fixed by the company is 300 units. Material – A is received within 4 to 6 weeks from the date of supply order. Minimum Level = ?
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48- G Ltd. produces a product, which has a monthly demand of 4,000 units. The product requires a component X, which is purchased at Rs. 20. For every finished product, one unit of component is required. The ordering cost is Rs. 120 per order and the holding cost is 10% p.a. At EOQ level purchase, Ordering Cost + Carrying Cost = ?
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49- Raw material price = Rs. 60 per kg., Handling cost = Rs. 360, Freight = Rs. 390 per order Incremental carrying cost of inventory of raw material = Rs. 0.50 per kg per month, Cost of working capital finance on the investment in inventory = Rs. 9 per kg p.a. Annual production = 1,00,000 units. 2.5 units are obtained from one kg of raw material. EOQ = ?
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50- If the minimum stock level and average stock level of raw material A are 4,000 and 9,000 units respectively, find out its “Re-order quantity”.
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