Unit 6 costing

mikes

Hi,

I am making a start on the costing unit; one of the problems I am having is remembering the different formulas for calculating the stock levels, as I keep forgetting them. Does anyone have an easy method of remembering them please and also more importantly are they likely to come up in the exams.

Thanks.

SandyHood

They are not likely to be in the exams, but the examiner is entitled to test certain aspects of stock control.
The key is always the standards for the unit.
Look at 6.1 D

Check cost information for stocks against usage and stock control practices

Knowledge and Understanding 5.

Methods of stock control and valuation including ........

and 19

Relationship between the materials costing system and the stock control system

So you might be asked to look at the stock levels over a period and comment on whether a product has been stored according to the levels layed down.

Maximum stock level calculation doesn't fit within the standards, so I do not consider it necessary to learn the formula using lead times and usage levels etc.

The same would apply to Minimum stock levels

The examiner has categorically said that Economic Order Quantity will not be examined, it couldn't be clearer!!

Re-order level has been assessed once, but is not strictly in the standards and upset some candidates as they had rote learnt formulae and not thought carefully about the question details.

If you want to always have a buffer stock equivalent to average weekly usage and then add on the max lead time x the average stock usage you will have the re-order level.
See Dec 04
http://www.aat-interactive.org.uk/past_papers/Intermediate_Advanced/2004/ECRDec04questions.pdf

I'd be surprised to see stock level calculations tested again under the current standards.

Use the standards as your guide, the text books can sometimes miss topics in the standards, and can more often add topics that are not.