Re-order level is calculated as:
A. Maximum consumption x Maximum re-order period
B. Minimum consumption x Minimum re-order period
C. 1/2 of (Minimum + Maximum consumption)
D. Maximum level - Minimum level
Answer: Option A
Solution(By Examveda Team)
Re-order level is calculated as Maximum consumption x Maximum re-order period. To calculate the reorder level, multiply the average daily usage rate by the lead time in days for an inventory item.Related Questions on Costing
Basic objective of cost accounting is ________
A. tax compliance.
B. financial audit.
C. cost ascertainment.
D. profit analysis.
Process costing is suitable for ________.
A. hospitals
B. oil refing firms
C. transport firms
D. brick laying firms
The cost which is to be incurred even when a business unit is closed is a _____.
A. imputed cost
B. historical cost
C. sunk cost
D. shutdown cost
Join The Discussion