In cost accounting, the 'Re-order Level' is calculated as: MCQ with Answer and Explanation

In cost accounting, the 'Re-order Level' is calculated as:
A. Minimum consumption rate x Minimum re-order period
B. Average consumption rate x Average re-order period
C. Normal consumption rate x Normal re-order period
D. Maximum consumption rate x Maximum re-order period
Answer: Option D
Solution (By JKExamLibrary)
The Re-order Level is the level at which a new order is placed. To ensure stock doesn't run out during the maximum lead time, it is calculated as Maximum consumption rate multiplied by Maximum re-order period.

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Practice More Accountancy and Book Keeping Questions

Question #1 Report Error
The 'Group Engagement Partner' is responsible for:
A. Component audit only
B. Tax filing
C. Overall group audit opinion and direction, supervision, and performance of the group audit engagement
D. Only his own work

Correct Answer: Option C


Explanation:
The engagement partner takes overall responsibility.

Question #2 Report Error
The 'Engagement Risk' is different from audit risk; it relates to:
A. Detection risk
B. Inherent risk
C. Risk of loss or injury to the auditor's professional practice from litigation, adverse publicity, etc.
D. Risk of material misstatement

Correct Answer: Option C


Explanation:
Engagement risk is a business risk for the auditor.

Question #3 Report Error
Which of the following is a current liability?
A. Goodwill
B. Sundry Creditors
C. Mortgage Loan
D. Debentures

Correct Answer: Option B


Explanation:
Sundry Creditors are amounts owed to suppliers for goods purchased on credit, which are typically due within one year, making them a current liability.