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Material Cost Control Interview Questions & Answers - Learning Mode
COOLINTERVIEW.COM COST ACCOUNTING INTERVIEW QUESTIONS MATERIAL COST CONTROL INTERVIEW QUESTIONS QUESTIONS & ANSWERS - LEARNING MODE

Material Cost Control Interview Questions & Answers - Learning Mode

Material cost control is the level of material maintenance so as to ensure uninterrupted production and minimizing the investment of funds. Materials cost is one of the important elements of cost of product or unit. It constitutes a substantial proportion of the total cost of production. For material cost control purposes, it is very essential to know them important aspects of material, material control and material purchase control.

Try Material Cost Control Interview Questions & Answers - Exam Mode

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Material Cost Control Interview Questions & Answers - Learning Mode
Try Material Cost Control Interview Questions & Answers - Exam Mode
Question: What do you understand by store keeping?

Answer: According to Alford and Beatty ?store keeping is that aspect of material control concerned with the physical storage of goods.? In other words,store keeping relates to art of preserving raw materials, work-in-progress and finished goods in the stores. Source: CoolInterview.com
Question: What is material cost?

Answer: ?Material control is a systematic control over purchasing, storing and consumption of materials, so as to maintain a regular and timely supply of materials, at the same time, avoiding overstocking.? Source: CoolInterview.com
Question: What is the necessity and importance of material control?

Answer: a)For knowing proper cost of production, control over materials is indispensable.
b)Certain techniques and methods are developed under the system of materials control thereby ensuring optimum utilisation of materials.
c)In order to undertake continuous checking of materials, the necessity of a proper system of materials control cannot be ignored.
d)A well managed system of materials control ensures the availability of different kinds of materials without delay. Source: CoolInterview.com
Question: What does Inventory Turnover ratio indicates?

Answer: The ratio indicates how quickly the inventory is used for production. Higher the ratio, shorter will be the duration of inventory at the factory. It is the index of efficiency of material management.
Source: CoolInterview.com
Question: What are the functions of store keeping?

Answer: The functions performed by the stores department are outlined below:
1.Issuing purchase requisitions to Purchase Department as and when necessity for materials in stores arises.
2.Receiving purchased materials from the purchase department and to confirm their quality and quantity with the purchase order.
3.Storing and preserving materials at proper and convenient places so that items could be easily located.
4.Storing the materials in such a manner so as to minimise the occurrence of Source: CoolInterview.com
Question: Explain purchasing process?

Answer: Purchasing is the formal process of buying goods and services. The purchasing process can vary from one organization to another, but there are some common key elements.The process usually starts with a demand or requirements ? this could be for a physical part (inventory) or a service. A requisition is generated,which details the requirements (in some cases providing a requirements specification) which actions the procurement department. A request for proposal (RFP) or request for quotation (RFQ Source: CoolInterview.com
Question: What is a material requisition?

Answer: A materials requisition form is a source document that the production department uses to request materials for manufacturing process. The production manager usually fills out the materials requisition form and delivers it to the materials or storage department where all of the raw materials are stored. Source: CoolInterview.com
Question: What is industrial purchasing?

Answer: The purchaser is buying to convert material into finished product. It entails buying raw materials. Components,supplies and consumable stores,spares and tools,machines and equipment and office appliance. Source: CoolInterview.com
Question: What is the difference between centralized and decentralized storage?

Answer: Centralized storage means a single store for the whole organisation, whereas decentralized storage means independent small stores attached to various departments. Source: CoolInterview.com
Question: What is maximum level?

Answer: Maximum level is the level above which stock should never reach. It is also known as ?maximum limit? or ?maximum stock?. The function of maximum level is essential to avoid unnecessary blocking up of capital in inventories, losses on account of deterioration and obsolescence of materials,extra overheads and temptation to thefts etc. This level can be determined with the following formula.
Maximum Stock level = Reordering level + Reordering quantity ?(Minimum Consumption x Minimum re-orderin Source: CoolInterview.com
Question: State the requirements of a system of a material control?

Answer: The important requirements or essentials of adequate and satisfactory system of material control are as follows:
(i)Proper co-ordination
(ii)Competent Purchasing agent
(iii)Use of Standard Forms.
(iv)Control by budgeting material and Equipment.
(v)Storage Location. Source: CoolInterview.com
Question: What is VED Analysis?

Answer: Vital essential and desirable analysis is used primarily for the control of spare parts. The spare parts can be divided into three categories:
(i) Vital:The spares the stock out of which even for a short time will stop production for quite some time and future the cost of stock out is very high are known as vital spares.
(ii) Essential:The spare stock out of which even for a few hours of days and cost of lost production is high is called essential.
(iii) Desirable:Spares are those which Source: CoolInterview.com
Question: Name the four sections in the process of store keeping.

Answer: There are four sections in the process of store keeping viz.
(a) Receiving section
(b) Storage section
(c) Accounting section
(d) Issue section. Source: CoolInterview.com
Question: What is periodic inventory system?

Answer: Periodic inventory is a system of inventory in which updates are made on a periodic basis. This differs from perpetual inventory systems,
where updates are made as seen fit. In a periodic inventory system no effort is made to keep up-to-date records of either the inventory or the cost of goods sold. Source: CoolInterview.com
Question: What are the objectives of store keeping?

Answer: Following are the main objectives of an efficient system of store keeping:
1.To ensure uninterrupted supply of materials and stores without delay to various production and service departments of the organisation.
2.To prevent overstocking and under stocking of materials.
3.To protect materials from pilferage, theft fire and other risks.
4.To minimise the storage costs.
5.To ensure proper and continuous control over materials. Source: CoolInterview.com
Question: What is minimum level?

Answer: It represents the lowest quantity of a particular material below which stock should not be allowed to fall. This level must be maintained at every time so that production is not held up due to shortage of any material.It is that level of inventories of which a fresh order must be placed to replenish the stock.This level is usually determined through the following formula:
Minimum Level = Re-ordering level ?
(Normal rate of consumption x Normal delivery period). Source: CoolInterview.com
Question: How is Inventory Turnover Ratio calculated?

Answer: These are calculated to minimise the inventory by the use of the following formula:
Inventory Turnover Ratio = Cost of goods consumed/sold during the period/Average inventory held during the period
Source: CoolInterview.com
Question: How is Economic Order Quantity calculated?

Answer: Q = v2AS/I
where; Q stands for quantity per order ;
A stands for annual requirements of an item in terms of rupees;
S stands for cost of placement of an order in rupees; and
I stand for inventory carrying cost per unit per year in rupees. Source: CoolInterview.com
Question: What is meant by material control?

Answer: Materials Control (MC) is an all-inclusive procurement, inventory and cost control system customized in order to meet the special needs and
requirements of the hospitality industry. It aims to effectively manage all property inventory, bringing a new level of efficiency to operations. Source: CoolInterview.com
Question: Explain the types of Purchase Order.

Answer: Purchase Order (PO) can be of various types, including:
a) standard - a one time buy.
b) planned - an agreement on a specific item at an approximate date.
c) blanket - an agreement on specific terms and conditions: date and quantity and amount are not specified. Source: CoolInterview.com

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