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Costing Material chapter Questing

Shriram Ramachandran (IPCC Student CWA Inter & Processing officer in GNSA Infotech Ltd) (492 Points)

30 March 2011

ROQ = 100 Units, Max Usage = 50 Units, Max Level = 100 Units, Min LT = 2 Weeks

Find Min Level, ROL & Avg Level.

Plz tell me how to solve this Question.

Thanks in Advance

R SHRIRAM

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2 Replies

CA Naveen Kumar Agrawal (Chartered Accountant / MBA) (939 Points)
Replied 30 March 2011

in ur ques figures are not supporting to the concept of this chapter... either u have manipulated with data or misrepresented data....

as max lvl can not be equal to ROQ.. it should be more than ROQ

coz MAX LVL = ROQ + ROL - (MIN USG* MIN LT)

so as per ur data ROL = MIN USG * MIN LT

which seems not to be good....

plz check it out once again. even if u find no change then leave the ques. n concentrate on another one.

Shriram Ramachandran (IPCC Student CWA Inter & Processing officer in GNSA Infotech Ltd) (492 Points)
Replied 30 March 2011

Sorry sir I am not manipulated with data I took this Question from a book, but I have the solution in the same book which I cant able to understand so to know the easy way to solve the probs I posted in this Form. Here is the solution given in the book.

Sol: Avg Lvl = (Min Lvl + Max Lvl)/2

Avg Lvl = Min Lvl + (ROQ/2)

Therefore (Min Lvl + Max Lvl)/2 = Min Lvl + (ROQ/2)

When Multiplying by 2

Min Lvl + Max Lvl = 2(Min Lvl) + ROQ

Max Lvl = 2(Min Lvl) - Min Lvl + ROQ

Max Lvl = Min Lvl + ROQ

Or Min Lvl = Max Lvl - ROQ

So Min Lvl =100-100 = 0

As Min Lvl = 0 = ROL - (Avg Usage * Avg LT)

So ROL = Avg Usage * Avg LT

As Max Lvl = ROQ = 100, ROL = (Min Usage * Min LT)