Question (2)INDICATE WHETHER EACH OF THE FOLLOWING STATEMENTS IS TRUE OR FALSE:
I. Direct materials are those whose consumption may be identified with specific production unit and which become a part of the finished product.
- Indirect materials are those material which cannot be conveniently identified, with individual cost units.
- While purchasing materials, due consideration should not be given to the quality.
- Maximum level is that level above which stocks should not normally be allowed to rise.
- Minimum level is that level below which stock should not normally be allowed to fall.
- Re-order level or ordering level is that level of material at which purchase requisition is initiated for fresh supplies.
- Danger level is that level at which normal issues are stopped and materials are issued for important jobs only.
8. Lead Time is the time interval between the time on item reaches order level and actual
receipt of materials.
9. EOQ is that size of the order. which does not gives maximum economy in purchasing -material.
10. At EOQ, ordering cost and carrying cost of stock are not equal. Ans: [True: (1), (2), (4), (5), (6), (7), (8): False: (3), (9), (10)].
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