Material Pricing

Question 1

A % increase in material cost will lead to ?

Answer 1

A % increase in net profits

Question 2

Net profit =

Answer 2

Sales - Total expenses

Question 3

What accounting category does Material Stock fall under?

Answer 3

Current Assets

Question 4

______ is the process of determining the quantity of material stock demanded by relying on experiences of the past and future expectations

Answer 4

Probability distribution

Question 5

What is lead time?

Answer 5

The period between an order is made and when the order is received

Question 6

We

Question 7

Stock that should be kept incase demand increases or supply is delayed?

Answer 7

Safety Stock

Question 8

The term for “running out of stock”

Answer 8

Stock-out

Question 9

_____ is kept to minimize stock out?

Answer 9

Safety-stock

Question 10

Purchase stock varying would be as a result of?

Answer 10

Quantity discount

Question 11

Purchase costs can be _____ or ______ based on cost behavior?

Answer 11

Fixed and variable

Question 12

Ordering cost is low when stock is ordered _____ and ordering cost is high when stock is ordered _____?

Answer 12

Infrequently and frequently

Question 13

What are the categories of stock costs?
Clue: POCS

Answer 13

Purchase costs
Ordering Costs
Carrying or holding costs
Stock-out costs

Question 14

Another name for carrying cost is?

Answer 14

Holding cost

Question 15

What is carrying cost?

Answer 15

Cost of keeping or holding stock till they are issued for production or sold

Question 16

______ is a fixed percentage of average stock?

Answer 16

Carrying cost

Question 17

_____ is the most difficult stock cost to measure and estimate?

Answer 17

Stock-out costs

Question 18

If the customer can wait, stock out costs would include?

Answer 18

Cost of expediting the order
Cost of processing the order

Question 19

If the customer can wait, stock out costs would consist of?

Answer 19

Loss of Goodwill
Loss of contribution to profit

Question 20

Total stock costs = ?

Answer 20

P + O + C + S

Question 21

The quality of material stock is determined by the purchasing officer using _______?

Answer 21

Purchase Requisition Form

Question 22

What is decentralized purchasing?

Answer 22

When each department in an organization is responsible for placing its own orders

Question 23

What is centralized purchasing?

Answer 23

When one department is responsible for all purchases

Question 24

Will centralized purchasing reduced cost of goods?

Answer 24

Yes

Question 25

In a decentralized purchasing system, who drafts the purchase requirement form?

Answer 25

Department heads

Question 26

In a centralized purchasing system, who drafts the purchase requirement form?

Answer 26

Storekeeper

Question 27

What is a purchase requirement form?

Answer 27

It is used to initiate purchasing in a firm

Question 28

Who places the order?

Answer 28

Purchasing officer

Question 29

The purchase requirement form includes

Answer 29

Issue date, requisition number,code and description of materials, quantity required, delivery date and the signature of the official authorizing the form

Question 30

Who decides where to buy material stock?

Answer 30

Purchasing Officer

Question 31

______ forms the basis of legal contract between the buyer and the supplier?

Answer 31

Purchase order

Question 32

The purchase order is sent to?

Answer 32

1) department making the requisition
2) goods receiving department
3) accounting department

Question 33

The purchase order contains

Answer 33

1) exact material specifying quantity and price
2) name and address of supplier
3)delivery date
4) signature of purchasing officer

Question 34

______ indicates the description of materials, date,supplier, purchase order number and the quantity of materials delivered

Answer 34

Goods Received Note

Question 35

What are the documents for recording the quantities of materials held in a store?

Answer 35

Bin Card / Stock Card kept
The Stores Ledger Card

Question 36

The bin card is kept in the _______ while the Stores Ledger Card is kept in the _________?

Answer 36

Store and Accounting Office

Question 37

Does bin card show the monetary value of materials?

Answer 37

No

Question 38

Monetary Values are recorded in what type of document?

Answer 38

Stores Ledger Carc

Question 39

What are the two types of perpetual inventory record?

Answer 39

Bin Card and Stores Ledger Account

Question 40

______ is the method of recording stores materials after every transaction?

Answer 40

Perpetual Inventory Method

Question 41

_______ is the method of checking the physical quantities in stores regularly, a few at a time till all are checked

Answer 41

Continuous stock taking

Question 42

Definition of Material Requisition (the firm being the supplier)

Answer 42

Defined as the document of authority used to initiate withdrawal of materials from the store

Question 43

________ is a single document that contains a list of materials required for a specific order

Answer 43

Bill of materials

Question 44

________ is a classified record of materials issued and returned

Answer 44

Material Analysis Shee

Question 45

_______ approach is to stock control is regarded as Demand Pull System

Answer 45

Just In Time approach

Question 46

______ system produces for immediate sale and not for holding/keeping in the store?

Answer 46

Just In Time system