UnitName ChapterName SectionName Questions A

The most important element of cost is _____. Material

Material Cost Material Cost Material Cost
Request to the supplier to supply material is an
Material Cost Material Cost Material Cost _____. re-order
Maximum
_____ _____ are fixed to control inventory.
Material Cost Material Cost Material Cost Level
_____ _____ indicates maximum stock to be Maximum
Material Cost Material Cost Material Cost maintained. Level
Economical size of order is called as _____.
Material Cost Material Cost Material Cost Production
_____ _____ _____ shows minimum stock to Minimim
Material Cost Material Cost Material Cost be maintained. Stock Level
Scientific purchasing begins with _____. Indenting
Material Cost Material Cost Material Cost
Goods received note is prepared by _____
Material Cost Material Cost Material Cost _____. Purchase
_____ _____ shows stock position at the bin. EOQ
Material Cost Material Cost Material Cost
_____ _____ _____ is decided on the basis of
EOQ
Material Cost Material Cost Material Cost ordering cost and carrying cost.
_____ _____ _____ locks of maximum working Average Stock
Material Cost Material Cost Material Cost capital. Level
_____ analysis shows classification of
EOQ
Material Cost Material Cost Material Cost inventory into three categories.
_____ class items requires loose control. C
Material Cost Material Cost Material Cost
_____ class items are costliest. A
Material Cost Material Cost Material Cost
_____ class items requires more attention. B
Material Cost Material Cost Material Cost
_____ class items require moderate control. C
Material Cost Material Cost Material Cost
Purchase order is an order to Stores Department
Material Cost Material Cost Material Cost to issue materials. True
EOQ is that quantity which is most economical
Material Cost Material Cost Material Cost to order. True
Material Cost Material Cost Material Cost EOQ is also called as re-order quantity. True
Investment in inventory should be optimised by
Material Cost Material Cost Material Cost maintaining low stock levels. True
Direct materials is the materials which can be
Material Cost Material Cost Material Cost directly related to the cost centre. True
The stock in hand may exceed the maximum
Material Cost Material Cost Material Cost stock level. True
Stock levels are fixed up for inventory control.
Material Cost Material Cost Material Cost True
In no case, material should go below minimum
Material Cost Material Cost Material Cost level. True
The objective of scientific purchasing is to
Material Cost Material Cost Material Cost procure materials of good quality. True
Purchase requisition requests the supplier to
Material Cost Material Cost Material Cost supply materials. True
Invitation to tender is signed by the Purchase
Material Cost Material Cost Material Cost Officer. True
 Purchase Order is a request to the supplier to
Material Cost Material Cost Material Cost send information about materials. True
Delivery challan is an evidence of delivery of
Material Cost Material Cost Material Cost materials. True
Material Inspection Note is forwarded to the
Material Cost Material Cost Material Cost Stores Department. True
Bin Card gives information about position of
Material Cost Material Cost Material Cost each item. True
Stores Ledger shows movement of materials
Material Cost Material Cost Material Cost showing quantity and value. True
Material Abstract is the analysis of material
Material Cost Material Cost Material Cost issued against the material requisitons. True
Under Perpetual Inventory System, store
balance is ascertained after every receipt and
Material Cost Material Cost Material Cost issue of material. True

Material Cost Material Cost Material Cost The most important element of cost is material
Purchase of
Material Cost Material Cost Material Cost The function of Purchase Department is materials
Request to the
supplier to
supply
Material Cost Material Cost Material Cost Purchase order is a materials
Material Cost Material Cost Material Cost Goods received note is normally prepared in six copies
control
Material Cost Material Cost Material Cost Stock levels are fixed to inventory
maximum
Maximum level indicates inventory to be
Material Cost Material Cost Material Cost kept

EOQ is economical
Material Cost Material Cost Material Cost size of order

economic size
Material Cost Material Cost Material Cost EOQ is also known as of order
minimum stock
Minimum inventory level is to be
Material Cost Material Cost Material Cost maintained

Material Cost Material Cost Material Cost Material control encompasses : Purchasing
The essentials of sound material control
Material Cost Material Cost Material Cost procedure include : Coordination
Adequacy of
The objective of material control is :
Material Cost Material Cost Material Cost inventory
Indenting for
Scientific purchasing begins with :
Material Cost Material Cost Material Cost materials
Material Cost Material Cost Material Cost Purchase order is prepared generally in : 4 copies

The function of Receiving Department is to : Open the

Material Cost Material Cost Material Cost packages
production
Material requisition is signed :
Material Cost Material Cost Material Cost department
Production
Bill of material is signed by : planning
Material Cost Material Cost Material Cost department
Material Cost Material Cost Material Cost Material inspection note is signed by the : Inspector
purchase
Goods received note is prepared by :
Material Cost Material Cost Material Cost department
Material is
transferred
from one
department to
another
Material Cost Material Cost Material Cost Material transfer note is prepared when : department

Bin card shows : Receipt of

Material Cost Material Cost Material Cost stores
Most
EOQ is : economical
Material Cost Material Cost Material Cost size of order
Carrying cost
EOQ is decided on the basis of :
Material Cost Material Cost Material Cost of inventory
Order should be placed with the supplier when
Material Cost Material Cost Material Cost the inventory touches : maximum level
Maximum
Minimum Inventory level shows :
Material Cost Material Cost Material Cost inventory

More working
Material Cost Material Cost Material Cost Maximum inventory locks up : capital

Opening
Material Cost Material Cost Material Cost Average inventory is : inventory

Minimum inventory is to ensure : minimum

Material Cost Material Cost Material Cost working capital
Inventory
Material Cost Material Cost Material Cost ABC analysis is a technique developed for : management

EOQ is the _____ size of the order at that point

Material Cost Material Cost Material Cost ordering and carrying costs are minimised. Optimum
In ABC analysis ‘C’ class items require :
Material Cost Material Cost Material Cost Loose control

Material Cost Material Cost Material Cost In ABC analysis ‘A’ class items require : Loose control
Optimise
investment in
Material Cost Material Cost Material Cost The objective of inventory management is to : current assets
Average annual consumption of material is
20,000 kgs at a price of ` 2 per kg. The holding
cost is 16% and ordering cost is ` 50. How
Material Cost Material Cost Material Cost much should be EOQ? 2500 kgs
A factory required 1,000 units per year. The
cost of placing an order is ` 60 and carrying cost
Material Cost Material Cost Material Cost is ` 3 p.a. The EOQ is 200
 A firm requires 16,000 units per year. It
purchases at ` 60 each. The cost of placing an
order is ` 120 and annual carrying cost is 10%
of the cost. To get maximum benefits, the firm
Material Cost Material Cost Material Cost should place an order for _____ at a time. 800 units
The annual usage of the particular material is
2,00,000 units. The EOQ is 20,000 units. Cost
of placing an order is ` 80. Invoice cost is ` 500
Material Cost Material Cost Material Cost per unitt. The average inventory is 10,000 units
Refer the above question the estimated annual
Material Cost Material Cost Material Cost ordering cost is ` 800
 B C D Answer Solution
Chargeable
Material
Overheads Labour Exp. A
None of the
Purchase Order Purchase Order
sale invoice above B
Minimum Re-Order Inventory Inventory
Level Level Levels D Levels
Minimum Re-Order Maximum
Level Level Danger Level A Level
None of the
EOQ EOQ
above B
Maximum Average Stock None of the Minimim
Stock Level Level above A Stock Level
Selection of
Indenting
Inspection Ordering the supplier A
Stores Stores
Finance Sales B
None of the
ABC Bin Card Bin Card
above C
Maximum Minimum Average Stock
EOQ
Stock Level Stock Level Level A
Maximum Minimum None of the Maximum
Stock Level Stock Level above B Stock Level
None of the
ABC Bin Card ABC
above B
None of the
A B C
above A
None of the
B C A
above A
None of the
A C A
above B
None of the
B A B
above B

False B False

False A True
False A True

False A True

False A True

False B False

False A True

False B False

False B False

False B False

False A True
False B False

False A True

False A True

False A True

False A True

False A True

False A True
chargeable
material
labour overheads Exp. A
Production of purchase of
Sale of scrap goods Sale of goods A materials
request to the
Request to the supplier to
supplier to Acknowledge supply
verify the stock ment of goods Sale invoice A materials
five copies four copies five copies A six copies
purchase control cost of none of the control
material scrap above A inventory
minimum average maximum
inventory to be inventory to be none of the inventory to be
kept kept above A kept
economical economical economical
size of size of none of the size of order
production production above A
maximum level economic size
economic order of stock to be of order
to be placed fixed re-order level A
maximum average stock minimum stock
stock to be to be to be
maintained maintained danger level B maintained
All of the
Storing Issue All of the D above
All of the All of the
Internal check Reporting above D above
Effective All of the All of the
Use of space storage above D above
Selection of Indenting for
Ordering Inspection the supplier A materials
5 copies 7 copies 2 copies B 5 copies
Check the All of the
quantity Prepare goods All of the above
received received note above D
purchase
foreman
department foreman accountant C
All of the All of the
Purchase Stores above above
department department D
 Cost All of the
Inspector
Storeskeeper accountant above A
stores sales finance stores
department department department B department
Material is
transferred
Material is from one
returned by the Material is department to
department to returned to the All of the another
stores supplier above A department
Closing All of the
Balance of All of the above
Issue of stores stores above D
Most
Quantity to be All of the
Most minimum order economical
above
size of order A size of order
Ordering cost Cost of
both (i) & (ii)
of Inventory purchases both (i) & (ii) D
Re–order level
Re–order level minimum level Danger level B
Minimum None of the Minimum
inventory Both (i) & (ii) above C inventory
More working
Less working Average None of the capital
capital working capital above A
Opening Opening
inventory + inventory +
Closing closing None of the closing
inventory inventory above C inventory
Safety of Safety of
production maximum None of the production
process profitability above B process
Inventory Finished stock Inventory
control WIP control control B control

None of the Optimum

Maximum Minimum above A
Moderate None of the
Loose control
Tight control control above A
Moderate None of the
Tight control
Tight control control above B
Optimise Reduce Optimise
investment in inventory None of the investment in
inventory levels above B inventory

2500 kgs
3000 kgs 2000 kgs 1000 kgs C

200
150 600 450 A
 800 units

1,000 units 400 units 1,200 units A

10,000 units
4,000 units 5,000 units 6,500 units A
` 800
` 400 ` 1,200 ` 1,600 A
UnitNumber

2
2

2
2

2
2

2
2

2
2

2
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