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.
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.
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