Material Costing. CA Past Years Exam Answers. 52,000 kgs..

Transcription

1 Material Costing CA Past Years Exam Answers Answer to Q.1 (May, 1999,006) Annual usage (U) 5,000 units p.m. 1 months kgs. P.u. 1,48,000 kgs. Cost per order (P) ` 350 Carrying cost per kg. p.a. () ` 15 per kg. 1% ` 1.80 (i) EOQ 1,48, ,030 kgs (ii) At EOQ level, the total of ordering and carrying cost is computed below:- Ordering cost ` 19,88 1,48,000 kgs. ` 350per order,030 kgs. per order Carrying cost ` 19,87,030 kgs.. ` 1.80per kg. p.a. ` 39,655 However, if the company purchases 5,000 kgs. Per order, in such a case, the total of ordering cost and carrying cost is computed below:- Ordering cost ` 8,400 1,48,000 kgs. ` 350per order 5,000 kgs. per order Carrying cost ` 46,800 5,000 kgs.. ` 1.80per kg. p.a. ` 55,00 Hence, Extra cost 55,00 39,655 ` 15,545 Ans. to Q. (Nov, 006) Annual usage (U) 75,000 units p.m. 1 months 90,000 units. Cost per order (P) ` Carrying cost per unit. p.a. () ` 60 ` Page No: 1.1

2 (i) Re-order quantity 90, ,873 units 6 (ii) Re-order level Maximum usage rate Maximum lead time 750 units per week 8 weeks 6,000 units (iii) Minimum stock level Re-order level (Avg. usage rate) (Avg. lead time) 6,000 units (500 units/week) (6.5 weeks) 6,000 units 3,50 units,750 unit. (iv) Maximum stock level Re-order level + Re-order Qty. (Min. usage rate) (Min. lead time) 6,000 units + 3,873 units (50 units per week) (5 weeks) 8,63 units (v) Average stock level Min. stock level + ½ (Re-order Qty.),750 units + ½ (3,873 units),750 units + 1,937 units 4,687 units. Ans. to Q.3 (Nov, 00) Annual usage (U) 75 kgs. per week 5 weeks 14,300 kgs. Cost per order (P) ` Carrying cost per kg. p.a. () ` 10/kg. ` , (i) Re-order quantity 1,196 kgs. (ii) Re-order level Maximum usage rate Maximum lead time 450 kgs. per week 8 weeks 3,600 kgs. (iii) Maximum stock level Re-order level + Re-order Qty. (Min. usage rate) (Min. lead time) 3,600 kgs + 1,196 kgs. (100 kgs. per week) (4 week) 4,396 kgs. (iv) Minimum stock level Re-order level (Avg. usage rate) (Avg. lead time) 3,600 kgs. (75 kgs. per week) (6 weeks) 1,950 kgs. (v) Average stock level Min. stock + ½ (Re-order Quantity) 1,950 kgs. + ½ (1,196 kgs.),548 kgs. Page No: 1.

3 Ans. to Q.4 (May, 1998, 000) Annual usage (U) 100 tubes. Per week 5 weeks 5,00 tubes Cost per order (P) ` Carrying cost per tube p.a. () ` 50 ` , (i) EOQ 3 tubes 10 Total inventory cost (at EOQ level) Purchase cost (5,00 ` 500) ` 6,00,000 5,00 tubes Ordering cost ` 10 tubes/order 10 tubes Carrying cost ` /order ` ` 5,100 ` 6,10,198 Total inventory cost (at purchase level of 1,500 units) Purchase cost (5,00 ` 475) ` 4,70,000 (after considering 5% discount) 5,00 tubes ` 347 Ordering cost ` 100/order 1,500 tubes per order 1,500 tubes 0 ` 71,50 Carrying cost ` 475x 100 ` 5,41,597 The discount offer may be accepted as it will lead to decrease in total inventory cost to the extent of ` 68,601 9 ` 6,10,198 ` 5,41,597) (ii) Re-order level Maximum usage rate Maximum lead time 00 tubes per week 8 weeks 1,600 tubes, Ans. to Q.5 (Nov, 1999) (i) uper Grow Nature s Own Annual usage (U),000 bags 1,80 bags Cost per order (P) ` 1,00 ` 1,400 Carrying cost per bag p.a. () ` 480 ` 560,000 1,00 EOQ 100 bags 480 (ii) Ordering cost + Carrying cost (uper Grow),000 bags Ordering cost ` 1,00per order 100 bags per order 100 bags per order Carrying cost ` 480per bagp.a. 1,80 1, bags ` 4,000 ` 4,000 ` 48,000 Page No: 1.3

4 Ordering cost + Carrying cost (Nature s Own) 1,80 bags Ordering cost ` 1,400per order 80 bags per order 80 bags per order Carrying cost ` 560per bagp.a. `,400 `,400 ` 44,800 Ans. to Q.6 (May, 001) If we purchase 1,000 units, the numbers of defective units are ource I % of 1,000 units 0 units ource II.8% of 1,000 units 8 units Hence, if we select source II, there will be additional 8 defective units for which the cost of rectification will be ` 40 (4 units ` 5 per unit). We are also given that source II will give discount of ` 100. Therefore, if we select source II, there will be net saving of ` 60 (`100 ` 40) Ans. to Q.7 (Nov, 004) (i) tatement showing the total cost at different order sizes Order size (Q) (Units) No. of orders A/Q (units) Cost of Purchase Ax per unit cost Ordering cost A/Q 1,500 Carrying cost Q/ price 5% Total cost (C + D + C) (A) (B) (C) (D) (E) (F) ,00,000 1,56,50 48,000 50,04,50 (500 9,600) 40 9, ,80,000 1,5,000 58,500 48,63,500 (500 9,360) 50 9, ,60,000 6,500 1,14,000 47,36,500 (500 9, , ,40,000 31,50,,000 46,93,50 (500 8,880) 00 8, ,0,000 0,875 3,4,000 46,64,875 (500 8,640) 300 8, It is observed that total inventory cost is at minimum level when the order size is 300 units. Hence, the most economical purchase level is 300 units. (ii) If there is no discount and price per tonne is ` 10,500, EOQ is compute below:- EOQ 500 tonnes `1,500 per order 69 tonnes ` 10,500 5% Page No: 1.4

5 Ans. Q.8 (May, 00) Annual usage (U) 0,000 units 4 80,000 units 0.5 kg 40,000 kgs Cost of one order (P) ` 100 Carrying cost/kg/annum () ` EOQ 40, ,000 kgs. Lead time 36 days afety stock 1,000 kgs. No. of days in a year 360 days i) Re-order level afety stock + Average requirement during lead time 40,000 kgs. 1,000 kgs + 36 days 1,000 kgs. + 4,000 kgs. 5,000 kgs. 360 days ii) tatement showing ordering and carrying cost considering the effect of discount No. of Order size Ordering cost Carrying cost Discount Total cost orders 1 40, ,000 kgs. + 41,000 kg. 4,000 38,100 ` 0, , , iii) EOQ,000 kgs. 40,000 kgs No. of orders 0 orders/year,000 kgs Ans. to Q.9 (Nov,1997) (i) Inventory turnover ratio 4,000 1,000 kgs. + 1,000kg. `,000 1,000 kgs. + 11,000kg. ` 1,000 1,000 kg. + 7,667 kg. ` 8,667 Raw material consumed Average stock of raw material Openingstock + Purchases- Closing stock Openingstock + closing stock 3,00 19,000,000 10, ,867 Page No: 1.5

6 ` 90,000+ `,70,000-` 1,10,000.5 times ` 90,000+ ` 1,10,000 (ii) Number of days for which average inventory is held 365 days Inventory turnover ratio days.5 Ans. to Q.10 (Nov, 001 and May, 014) Annual usage (U) 1,00,000/.5 40,000 kgs Cost of one order (P) ` 750 Carrying cost /kg/annum () (0.50 x 1) + 9 ` 15 40, i) EOQ,000 kgs 15 40,000 kgs No. of orders 0,000 kgs/order 365 days ii) Time gap between two order 18 days. 0 iii) Present amount of ordering and carrying cost in computed below Ordering cost (0 orders ` 750) ` 15,000 Carrying cost,000 kgs. ` 15,000 ( ` 15) ` 30,000 On the other hand, if the orders are placed on quarterly basis, there will be 4 orders of 10,000 kgs. each. In such a case, the aggregate of ordering & Carrying cost in computed below:- Ordering cost (4 orders 750) ` 3,000 Carrying cost 10,000 kgs. ` 75,000 ( ` 15) ` 78,000 Extra cost 78,000 30,000 ` 48,000 Hence minimum discount of ` 48,000 should be demanded from the supplier. ` 48,000kg Minimum discount per kg ` 1./kg 40,000kg Minimum discount (in %) ` 1.0/kg 100 % `60/kg. Page No: 1.6

7 Ans. to Q.11 (May, 004) Annual requirement (U) 54,000 units Cost per order (P) ` 9,000 Carrying cost p.u. p.a. () ` 300 (i) EOQ No. of order 54,000 9,000 1,800 units ,000 untis 1,800 units/orde r 30 orders 360 days Time gap between two orders 1 days 30 orders (ii) If 15% risk is to be taken, it means that 85% risk is not to be taken. Hence, it is recommended maintain reorder level of 7 days requirements despite the fact that average lead time is 6 days. 54,000 units Re-order level (7 days) 1,050units/day 1,050 units 360 days afety stock Reorder level (Average rate Average lead time) 1,050 units (150 units/day 6 days) 150 units. (iii) If 5% risk is to be taken it means that 95% risk is not to be taken, hence it is recommend to maintain reorder level of 9 days requirements despite the fact that average lead time is 6 days. Reorder level (9 days) (150 units/day) 1,350 units. afety stock Reorder level (Average usage rate Average lead time) 1,350 units (150 units/day 6 days) 450 units (iv) If stock out risk is 5%, the aggregate of ordering cost & carrying cost is computed below:- 54,000 units Ordering cost 30orders (` 9,000 per order) 1,800 units/order 450 units+,50 units Carrying cost ` 300 p.u. p.a. 54,000 units 600 (v) EOQ 300units 70 54,000 No. of orders in a year 180 orders days Time gap between two orders days 180 orders `,70,000 ` 4,05,000 ` 6,75,000 Page No: 1.7

8 Ans. to Q.1 (Nov, 007) Annual usage (U) 8,000 units Cost per order (P) ` 00 Carrying cost p.u. p.a. () ` 400 0/100 ` 80 (i) EOQ 8, units 80 (ii) Total inventory cost (at EOQ level) Purchase cost (8,000 units ` 400 p.u.) ` 3,00,000 8,000 units ` 8,000 Ordering cost ` 00/ orders,000 units/order 00 units ` 8,000 Carrying cost (` 80 p.u. p.a. ` 3,16,000 We are given that discount of 4% will be available if we purchase 4,000 units per order. In such a case, total inventory cost is computed below:- Purchase cost (8,000 units ` 384 p.u.) ` 30,7,000 Ordering cost 8,000 units 00/ orders ` 400 4,000 units/order 4,000 units ` 1,53,600 Carrying cost (` 384 p.u. 0/100) ` 3,6,000 Hence, the discount offer may not be accepted as it will lead to increase in inventory cost to the extent of ` 10,000 (3,6,000 3,16,000) Ans. to Q.13 (CA) Present ituation Output A Inputs X and Y Ratio 1:1 Mfg. loss 5% of output Hence, in order to produce output of 1 kg, input of 1.5 kg in to be consumed in the following proportion:- X 1.5 x kg Y 1.5 x kg Page No: 1.8

9 Let us compute elling Price/kg of A in the following manner:- Material cost X 0.65 ` 100/kg 6.50 Y 0.65 ` 60/kg ` 100 Production Expenses (50% of materials) ` 50 Total cost per kg of A ` 150 Profit 1 of cost ` 50 3 elling Price per kg of A ` 00 Future ituation Output A Inputs X and Z Ratio to be computed (?) Mfg. loss 5% of output. We are given that selling price and profit per kg. of A should remain unchanged. It means that the amount of material cost, production expenses and total cost per kg. of A should also remain unchanged. Let us assume that kg of material X is to be consumed under the new situation. Hence, material Z to be consumed is (1.5 ) kg. Following equation can be formed: ( kg of material X) (` 100/kg) + [(1.5 ) kg. of material Z] (`50/kg) 100 (Existing material cost) olving, we get 0.75 kg. Hence, under the new situation, material X to be consumed is 0.75 kg & material Z to be consumed in 0.5 kg. Ratio between X and Z 3: Ans. to Q.14 (May, 007) Annual usage (U) 18,50 units Cost per order (P) ` 50 Carrying cost p.u. p.a. () ` /100 ` 7.30 EOQ 18, units 7.30 Ans. to Q.15 (Nov, 007 Annual requirement (U) ,680 units Cost per order (P) ` 40 Carrying cost p.u. p.a. () 35% of ` 5 ` 8.75 EOQ 4, units Page No: 1.9

10 Ans. to Q.16 (May, 008) Annual usage (U) 40,000 packs Cost per order (P) ` 8 Carrying cost per pack p.a. () ` 40 10/100 ` 4 40,000 8 (i) EOQ 400 packs 4 40,000 packs (ii) No. of orders in a year packs/orde r (iii) Ordering cost + torage & Carrying cost Ordering cost (100 orders ` 8 per order) ` packs ` 800 torage & Carrying cost (` 4 per pack p.a.) ` 1,600 (iv) Re-order level safety stock +Avg. requirement during lead time 40,000 packs Nil + 3days 333 packs. 360 days We are given present inventory level is 333 packs which is equal to re-order level, as computed above. Hence, the next order is to be placed immediately. Ans. to Q.17 (Nov, 008) We know that Total Carrying Cost EOQ Carrying cost p.u. p.a. EOQ ` 9,000 ` ,000 Hence, EOQ 5,000 units Ans. to Q.18 (Nov, 009) Annual requirement (U),000 units Costing per order (P) ` 0 torage & Carrying cost p.u. p.a. () (% of 8% ) of ` 0 ` EOQ, units,000 No. of orders Total inventory cost Purchase cost (,000 units@ ` 0) ` 40,000 Ordering cost (10 orders ` 0) ` units ` 00 Carrying cost ` p.u. p.a. ` 40,400 Page No: 1.10

11 Ans. to Q.19 (Nov, 009) Minimum usage per week 750 units Maximum usage per week 1,50 unit Average usage per week 1,000 units Annual usage (U) 1,000 units /week 5 weeks 5,000 units Cost per order (P) ` 150 Carrying cost per unit p.a. () ` 3.1 (i) EOQ 5, ,36 units 3.1 (ii) Re-order level Maximum usage rate Maximum lead time 1,50 units/week 3 weeks 3,750 units Minimum stock Re-order level (Avg. usage rate) (Avg. lead time) 3,750 units (1,000 units/week) ( weeks) 3,750 units,000 units 1,750 units. Maximum stock level Re-order level + Re-order quantity (Minimum usage rate) (minimum lead time) 3,750 units +,36 units (750 units/week) (1 week) 5,36 units. Ans. to Q.0 (May, 010,11) Maximum tock Level Re-order level + Re-order quantity (Minimum usage rate) (Minimum lead time) Hence, Re-order level Maximum stock level Re-order quantity + (Minimum usage rate) (Minimum lead time) 8,000 kgs. 5,000 kgs. + (50 kgs. / hr. 8 hrs./ day) (4 days) 8,000 kgs. 5,000 kgs. + 1,600 kgs. 4,6000 kgs. Ans. to Q.1 (May, 010) PE-II (i) (1) Inventory turnover ratio (Raw material) Raw material consumed Average stock of Raw material ` 4,05,00,00 0 `,50, times Opening stock + closing stock Nil + 45,00,000 Average stock of raw material `,50,000 () Inventory turnover ratio (Finished goods) Cost of sales ` 4,05,00, times. Average stock of finished goods ` 1,08,00,00 0 Opening stock+ closing stock Nil +,16,00,000 Average stock of finished goods ` 1,08,00,000 Input consumed 1,80,000 units (3) Input-Output ratio % Output obtained 1,60,000 units Page No: 1.11

12 Input consumed (in quantity) ` 4,05,00,00 0 1,80,000 units ` 5 p.u Ordersheldupduetostock shortage (4) tock-out ratio 100 Total orders received 1,000 units % (1,00, , ,000) units Explanation:- During the year, the company has received order of 1,0,000 units and out of which, the order of 1,000 units could not be fulfilled due to stock shortage. Hence, the company fails to fulfill 10% of total ordered quantity. (ii) Comments:- (1) Raw material turnover ratio (18 times) is maintained at high level which means that the consumption of raw material is at fast speed and stock of raw material is held for short period. This situation is favorable to the organization. () Finished goods turnover ratio (3.75 times) is maintained at low level which means that sale of finished goods is at slow speed and stock of finished goods is held for long period. This situation is unfavorable to the organization. (3) Input output ratio of 11.5% means that 1.5% of total input is wasted in manufacturing procedure. (4) tock-out ratio indicates that the organization lacks internal control system in context of stock management. Ans. to Q. (Nov, 01) Annual usage (U) 8,000 units per quarter 4 quarters 3 kgs. p.u. 96,000 kgs Cost per order (P) ` 1,000 Carrying cost per kg. p.a. () ` 0 15/100 ` 3 (i) EOQ ` 96,000kgs. 1,000 per order 8,000 kgs. ` 3per kg. p.a. (ii) Total inventory cost (at EOQ level) Purchase cost (96,000 ` 0 per kg.) ` 19,0,000 96,000 kgs. `1,000 Ordering cost ` 1,000/order 8,000 kgs./order 8,000 kgs. ` 1,000 Carrying cost ` 3per kg. p.a. ` 19,44,000 We are given that discount of % will be received be received if we place 4 orders during the year of 4,000 kgs. each. In such a case, total inventory cost is computed below:- Purchase cost (96,000 ` per kg.) ` 18,81,600 Ordering cost (4 orders ` 1,000/order) ` 4,000 Page No: 1.1

13 4,000 kgs. 15 ` 35,80 Carrying cost ` per kg. 100 ` 19,0,880 The discount offer may be accepted as it will lead to decrease in total inventory cost to the extent of ` 3,10 (19,44,000 19,0,880) Ans. to Q.3 (B.com. (Hons.) Delhi 00, Modified], C (Ex. Dec, 010) Annual usage (U) 6,50 valves p.m. 1 months 75,000 valves Cost per order (P) ` 18 Carrying cost per valve p.a. () 0% of ` (i) EOQ 75, ,000 valves 0.30 (ii) Re-order point (level safety stock + Average requirement during lead time 3,00 valves + (6,50 valves p.m. 1.5 months) 1,575 valves. Ans. to Q.4 (May, 005) Adapted Annual usage (U) 1,000 units Cost per order (P) ` 1 Carrying cost p.u. p.a. () 4% of ` (i) Re-order quantity 1, , (ii) Re-order level safety stock + Average requirement during lead time 30 days consumption + 15 days consumption 1,000 units 1,000 units 30days 15days 360 days 360 days 1,000 units units 1,500 units. (iii) When the ordered material is received, the ideal situation is that the quantity in hand must be equal to the safety stock, i.e., 1,000 units. Ans. to Q.5 (B.com(Hons.) Delhi 001. imilar Computation of Economic Order Quantity (Tabular tatement) Order size Purchase cost Ordering cost Carrying cost Total cost 400 kgs. 6,000 ` 1/kg 6, (1 0%) 400 kgs ` 7,000 ` 3,000 ` 480 ` 75, kgs. 6,000 ` 11.90/kg 6, (` %) 500 kgs ` 71,400 `,400 ` 595 ` 74,395 1,000 kgs. 6,000 ` 11.80/kg 6,000 1, (` %) 1,000 kgs Page No: 1.13

14 ` 70,800 ` 1,00 ` 1,180 ` 73,180,000 kgs. 6,000 ` 11.70/kg 6,000,000 kgs 00 (` %),000 ` 70,00 ` 600 `,340 ` 73,140 3,000 kgs. 6,000 ` 11.60/kg 6,000 3, (` %) 3,000 kgs. ` 69,600 ` 400 ` 3,480 ` 73,480 6,000 kgs. 6,000 ` 11.60/kg 6,000 6, (` %) 6,000 kgs. ` 69,600 ` 00 ` 6,960 ` 76,760 It is observed that the least amount of Total Inventory Cost is obtained at the order size of,000 kgs. Hence, the most economical purchase level is,000 kgs. (ii) If there is no discount and purchase price is ` 1 per kg., in such a case, EOQ is computed below:- EOQ 6,000 kgs. ` 00 per order 1,000 kgs. 0%of ` 1per kg. Ans. to Q.6 (ICWA (Final) Modified Annual requirement (U) 1,000 units Cost per order (P) ` 15 Carrying cost p.u. p.a. () (15% + 5% +0%) ` 10 ` 4 EOQ 1, units 4 Total inventory cost (at EOQ level) Purchase cost (1,000 ` 10) ` 10,000 1,000 units ` 500 Ordering cost ` 15/ order 50 units/order 50 units ` 500 Carrying cost ` 4p.u.p.a. ` 11,000 We are given that discount of 10% will be received if we purchase 500 units each time. In such a case, total inventory cost is computed below:- Purchase cost (1,000 ` 9) ` 9,000 1,000 units ` 50 Ordering cost ` 15/ order 500 units/order 500 units ` 900 Carrying cost 40% ` 9p.u. ` 10,150 The discount offer may be accepted as it will lead to decrease in total inventory cost to the extent of ` 850 (` 11,000 ` 10,150). Ans. to Q. 7 (Nov, 014) Page No: 1.14

15 Let maximum lead time X, Minimum lead time Y. o, X Y 4 X+Y Average lead time 6, o, X + Y 1 olving, we get X 8, Y Hence, Maximum lead time 8 days, Minimum lead time 4 days Reorder level Maximum usage rate maximum lead time 1,60,000 units maximum usage 8 days o, Maximum usage 0,000 units per day. Maximum level ROL + ROQ (Minimum. usage Minimum. lead time) 1,90,000 1,60, ,000 (Min. usage 4 days) o, Min. usage 15,000 units per day Ans. to Q.8 (May, 009) Computation of Economic Order Quantity (Tabular tatement) Order size Purchase cost Ordering cost Carrying cost Total cost 400 units 9,600 ` 40 4 ` units ` 1.50 ` 3,84,000 ` 6,000 `.500 ` 3,9, units 9,600 ` 40 1 ` units ` 1.50 ` 3,84,000 ` 3,000 ` 5,000 ` 3,9,000,400 9,600 ` 38 4 ` 50,400 units units ` 1.50 ` 3,64,800 ` 1,000 ` 15,000 ` 3,80,800 4,800 9,600 ` 36 ` 50 4,800 units units ` 1.50 ` 3,45,600 ` 500 ` 30,000 ` 3,76,100 9,600 9,600 ` 36 1 ` 50 9,600 units units ` 1.50 ` 3,45,600 ` 50 ` 60,000 ` 4,05,850 Conclusion:- It is observed that Total Inventory cost is at minimum level when the order size is 4,800 units. Hence, in the given case, EOQ level is 4,800 units. Ans. to Q.9 (Nov, 010) (i) Computation of Economic Order Quantity (Tabular tatement) Order size Purchase cost Ordering cost Carrying cost Total cost 40 tonnes 500 ` 4,800 (500/40) 6,50 40/ (5% of 4,800) ` 4,00,000 ` 78,15 ` 4,000 ` 5,0,15 50 tonnes 500 ` 4,680 (500/50) 6,50 50/ (5% of 4,680) ` 3,40,000 ` 6,500 ` 9,50 ` 4,31, tonnes 500 ` 4,560 (500/100) 6,50 100/ (5% of 4,560) `,80,000 ` 31,50 ` 57,000 ` 3,68, ` 4,440 (500/00) 6,50 00/ (5% of 4,440) Page No: 1.15

16 tonnes 300 tonnes `,0,000 ` 15,65 ` 1,11,000 ` 3,46, ` 4,30 (500/300) 6,50 300/ (5% of 4,30) ` 1,60,000 ` 10,417 ` 1,6,000 ` 3,3,417 Conclusion:- It is observed that the amount of Total Inventory cost is at minimum level when order size is 300 units. Hence, in the given case, EOQ level is 300 units. (ii) If the is no discount and price per tonne is ` 5,50, in such a case, EOQ is computed below:- EOQ 500 tonnes ` 6,50 69 tonnes. 5%of ` 5,50 Ans. to Q.30 (May, 011) tores ledger Receipts Issues Balance Date Units Rate Amount Units Rate Amount Units Rate Amount April ,000 April , , ,000 April , , , ,75 April , , April , , April ,900 (shortage) 50 8, April , , , April , , Ans. to Q.31 (June, 010) CMA Inter Annual usage (U) 16,000 units Page No: 1.16

17 Cost per order (P) ` 10 Carrying cost per unit p.a. () ` 60 10/100 ` 6 16, EOQ 800 units 6 Hence, correct answer is option (3), i.e., 800 units. Ans. to Q.3 (Dec, 010) CMA Inter Average stock level minimum stock + ½ (Re-order Quantity) Hence, ½ (Re-order Quantity) Average stock level Minimum stock level. 9,000 units 4,000 units 5,000 units Re-order Quantity 5,000 units 10,000 units. Hence, correct answer is option (), i.e., 10,000 units. Ans. to Q.33 (June, 01) CMA Inter Method 1 Purchase Cost upplier Variable Fixed A `.0 p.u. Nil B `.10 p.u. `,000 Let us assume that the quantity level of units produces the situation where purchase cost is same for both the suppliers, i.e., Purchase cost (upplier A) Purchase Cost (upplier B) ,000 olving, we get 0,000 units Hence, correct answer is option, i.e. 0,000 units. Method Cost break-even position between two options Differencein Fixed Cost `,000 0,000 units Differencein Variable cost per unit 0.10 p.u. Ans. to Q.34 (Dec, 01) CMA Inter Cost per unit (P) ` 40 Carrying cost p.u. p.a. 10% of ` 10 ` 1 EOQ 800 units Annual requirement of raw material (U)? We know that EOQ 800 units U 40 1 Page No: 1.17

18 olving, we get U 8,000 units Annual requirement of raw material 8,000 units Correct answer is option (a), i.e., 8,000 units. Ans. to Q.35 (June, 009) C Executive (i) Ordering level (Re-order level) Maximum usage rate Maximum lead time 1,500 units/week 6 weeks 9,000 units. (ii) Maximum stock level Re-order level + Re-order Quantity (Minimum usage rate) (Minimum lead time) 9,000 units + 1,600 units (500 units/week) (4 weeks) 8,600 units. (iii) Minimum stock level Re-order level (average usage rate) (Average lead time) 9,000 units (1,000 units/week) (5 weeks) 4,000 units. Ans. to Q.36 (Nov, 013) CA (i) Annual Usage (U) 60,000 units Cost per order (P) ` 800 Carrying Cost per unit per annum () ` 10 15/100 ` , EOQ 8,000 units 1.5 (ii) Re order level afety tock + Average requirement during lead time 60,000 units 600 units + 10 days 300 days 600 units +,000 units,600 units Page No: 1.18