Maximum Level
Maximum Level = Re-order level + Re-order quantity – (Minimum consumption x Minimum
Re-order period)
2. Minimum Level
Minimum Level = Re-order level – (Average rate of consumption x Average time
required to obtain fresh delivery) (or)
Minimum Level = Re-order level – (Normal consumption x Normal Re – order period)
3. Re-order level
Re-order level = Maximum consumption x Maximum re-order period
4. Average Stock Level Average Stock Level = ½ (Maximum Level + Minimum level)
(or) Minimum level + ½ of Re-order Quantity
5. Danger level
Danger level = Average consumption x maximum re-order period for emergency
purchases.
6. Economic Ordering Quantity
1.EOQ = √ 2U XP/ S
U = Quantity(units) Purchased or used in a year P = Cost of Placing Order
S = Annual cost of storage of one unit
2.EOQ = √ 2AB / CS
A = Annual consumption in units B = Buying cost per order
C = Cost per unit S = Storage & carrying cost per annum.
3.EOQ = √ 2UO / C
U = Usage in units per annum O = Ordering cost
C = Cost of inventory carrying cost per unit in year.
4.EOQ = √2CO / I
C = Consumption of the material in units per year O = Ordering cost
I = Interest & other carrying cost per unit / annum.
5.EOQ = √2AB / S
A = Annual consumption in units B = Buying cost per order
S = Storage & carrying cost per annum.
- Inventory Turnover Ratio: =
Cost of materials consumed during the period
Average stock of material held during the period
Cost of material Consumed = Opening Raw material
+ Purchased Raw Material l – Closing raw material
Average stock of materials = ½ ( Opening Raw material +
Closing Raw materials)
Inventory Turnover in days = Days in the period
Inventory Turnover Ratio
8. Input – Output Ratio Analysis = Standard cost of Actual quantity
Standard cost of Standard quantity
9. No.of Orders = Quantity purchased / Consumed
Economic Order Quantity(EOQ)
10. Desired Purchase quantity = Difference in fixed Cost
Difference in Variable Cost
11. Computation of Purchase price of Raw Materials
Particulars Amount
Units Purchased(No of units X Price per unit/Kg) XXX
Less
Trade Discount (XXX)
Add XXX
Container Cost(No of containers X Per container) XXX
Less
Returned containers(No of containers X Per container) (XXX)
Add
Transport Charges XXX
Storage Charges XXX
Rent,Taxes,Insurance,Extra XXX
Total Material Cost XXX
12. Cost Per Unit = Total Material Cost
Total Units Purchased Process Costing Formula
Contract Costing Formula
Batch Costing Formula
Direct Labour Costing Formula