Inventory Flashcards
1
Q
Minimum Level
A
Re-order level - (Avg useage x Avg lead time)
2
Q
Maximum Level
A
Re-order level + Re-order qty - (Min useage x Min lead time)
3
Q
Re-order Level
A
Maximum useage x Maximum lead time
+ Buffer
4
Q
Economic order quantity (Re-order Qty)
A
2 x C,order x C,demand / C,hold (sq)
5
Q
Methods of inventory valuation
A
FIFO
LIFO
AVCO
6
Q
FIFO
A
Assumes all issues will be taken from oldest prices.
Inventory valued at most recent price.
HMRC adheres to IAS2.
7
Q
LIFO
A
Issues made on latest prices.
Inventory valued at older stock.
8
Q
AVCO
A
Issues based on average cost of all stock.
9
Q
Inventory valuation impact on profit?
A
Rising costs - FIFO return higher profit than LIFO.
Declining costs - LIFO return higher profit than FIFO.
