Page 9 - Cost Accounting - Ready Reckoner

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 Average Stock Level:
+

2
(or)
1
Minimum Stock level + x EOQ
2

[Both formulas will give different answers, based on information available, respective
formula can be used]

 Danger Level:
Minimum Consumption X Time required for emergency purchase.

Note: Re-order period is alternatively called the lead time.

Difference between Bin Card and Stores Ledger:

Bin Card is a record of stock taking, where quantitative information of movement
of stock is maintained. This enables maintaining stock levels such that there is no
stoppage of production.
Stores Ledger is maintained by the accounting department, where the quantity
and value of materials held is accounted. Issue of materials to production department
can be on the basis of:

1. FIFO (First In First Out)