A company manufactures 5,000 units of a product per month. The cost of placing an order is 100. The purchase price of the raw material is 10 per kg.…
CA Intermediate · Cost and Management Accounting · MTP · May 2025
A company manufactures 5,000 units of a product per month. The cost of placing an order is 100. The purchase price of the raw material is 10 per kg. The re-order period is 4 to 8 weeks. The consumption of raw materials varies from 100 kg to 450 kg per week, the average consumption being 275 kg. The carrying cost of inventory is 20% per annum. What is Maximum level of stock?
Suggested Answer and Working Notes:
Correct Answer: Option (A)
4,396 kg.
Topics: Material Cost
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