Question

Xyz limited introduced 10000 units in the process out of which 8000 units are in progress on which labour and overhead cost is incurred only 50% the following costs are incurred during the period. Material:40000
Labourand overhead cost:27000
Calculate the equivalent production and out of finished products and work in progress

Answer 1

Answer:

1. Ananya Ltd. produces a product ‘Exe’ using a raw material Dee. To produce one unit of

Exe, 2 kg of Dee is required. As per the sales forecast conducted by the company, it will

able to sale 10,000 units of Exe in the coming year. The following is the information

regarding the raw material Dee:

(i) The Re-order quantity is 200 kg. less than the Economic Order Quantity (EOQ).

(ii) Maximum consumption per day is 20 kg. more than the average consumption per day.

(iii) There is an opening stock of 1,000 kg.

(iv) Time required to get the raw materials from the suppliers is 4 to 8 days.

(v) The purchase price is `125 per kg.

There is an opening stock of 900 units of the finished product Exe.

The rate of interest charged by bank on Cash Credit facility is 13.76%.

To place an order company has to incur ` 720 on paper and documentation work.

From the above information FIND OUT the followings in relation to raw material Dee:

(a) Re-order Quantity

(b) Maximum Stock level

(c) Minimum Stock level

(d) CALCULATE the impact on the profitability of the company by not ordering the EOQ.

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