The sum of money infuse in the manufacturing of a product. The ingredients of a meal or the parts of a machine would be things that sustain material costs. This cost is apart from the cost of labor to yield the product. If you are well aware of material cost want to shift your career in material cost we have provided you all type of Material cost interview question and answers in our wisdomjobs site. If you are familiar with the material cost and there are various companies that offer job roles like Product Cost Engineer, assistant manager costing, Purchase Manager, Cost Engineer / Sr. Cost Engineer, Quantity Surveyor along with that there are many other job roles too. For more details on Material cost jobs visit our www.wisdomjobs.com.
Question 1. What Are The Steps In Procurement Of Material?
Answer :
Following are the steps in procurement of material:
Purchase Requisition is an indication to the purchase department to purchase certain material required for the production. Following particulars appear in the purchase requisition
Question 2. How Do You Calculate The Following Inventory Levels?
Answer :
Question 3. What Is Abc Analysis? Explain. What Are Its Advantages?
Answer :
ABC analysis means ‘Always Better Control’ is a technique which classifies the various items of inventory according to their importance. It is an analytical method of inventory control which concentrates on the most significant inventory items. For example: A class consists of those items which are less in number but most important in nature. B class consists relatively less important items. C class consists of large number of items which are less important. The importance of various items is decided on the basis of following factors:
Question 4. Explain Bills Of Materials?
Answer :
Bill of materials: is the list of all materials including all the details and quantity as required for a job or production process. This is prepared by the production department as soon as the order for the job is received. This also ensures proper inventory control. It gives an indication to the purchase department about the materials to be purchased if there is any shortage of material in the stores. A bill of material prepared in advance serves a base for quoting the price of the job.
Question 5. Explain Perpetual Inventory System?
Answer :
Perpetual inventory system: is a system under which continuous stocking takes place. This system is implemented by the large manufacturing units. It aims at maintaining bin cards and stores ledgers to know the quantity and value of the stock at any point of time which ensures that the physical balance and the book balance tallies. By systematically maintaining perpetual inventory system discrepancies can be easily located and can be adjusted in time. It also enable in locating slow and non-moving items and to take action for the same.
Question 6. Why Should Over Stocking Be Avoided?
Answer :
Due to the following consequences over stocking should be avoided:
Question 7. What Can Be The Consequences Of Under Stocking?
Answer :
The following can be the consequences of under stocking:
Question 8. Define Types Of Tenders-single Tender,limited Tender,open Tender,global Tender?
Answer :
Question 9. What Can Be The Discrepancies In Material Receipt?
Answer :
There are two categories of material discrepancies:
First category includes:
These discrepancies are normally caused by the transportation system.
Second category includes:
These discrepancies are caused by the manufacturer.
Question 10. Differentiate Between Bin Card And Stores Ledger?
Answer :
Question 11. What Can Be The Reasons For Bin Card And Stores Ledger Not Getting Reconciled?
Answer :
The following can be the reasons for bin card and stores ledger for not getting reconciled:
Question 12. Explain Valuation Of Receipts?
Answer :
Valuation of receipts is the price billed in the invoices by the supplier. Following points should be kept in mind for this purpose:
Question 13. Explain Valuation Of Issues And Valuation Of Returns?
Answer :
Question 14. Explain Average Price Method ?
Answer :
Average Price Method: is the method by which the value of total assets or expenses is assumed to be equal to the average cost of the total assets or expenses. Under this method, it is assumed that the cost of inventory is based on the average cost of the goods available for sale during the period. It is computed by dividing the total cost of goods by the total units which gives a weighted average unit cost for the units of the closing inventory.
Question 15. Explain Weighted Average Method ?
Answer :
Weighted Average Method: is the method of calculation in which the weighted average of both the lot sizes as well as the prices of the lot. This method is best for valuing material issues. This method is very useful where the prices and quantities of items vary. Practically, this method is very simple to calculate.
Question 16. What Are The Techniques Of Inventory Control?
Answer :
The techniques of inventory control are:
Answer :
Economic Order Quantity (EOQ) is the quantity which is fixed in such a way that the variable costs for managing the inventory can be minimized.
This consists of two parts: Ordering Cost and Carrying Cost. Ordering cost consists of all the costs associated with the administrative efforts connected with preparation of purchase requisitions, enquiries, filing tenders, and comparative statements etc. which are incurred in ordering materials. Carrying cost consists of all the costs which are incurred in carrying or holding the inventory like godown rent, insurance handling expenses etc. There is a inverse relationship between ordering cost and ordering cost. An effort should be made to balance both the costs, which is possible at Economic Order Quantity where the total variable cost of managing the inventory is minimum.
Question 18. Explain The Term Fixation Of Inventory Levels Related To Inventory Levels?
Answer :
Fixation of inventory levels : Fixation of inventory levels facilitates easy maintenance and control of various materials in a proper way. However, following points should be remembered: Only fixation of inventory levels does not facilitate inventory control. A constant watch on the actual stock level of materials should be kept so that proper action can be taken in time The levels which are fixed are not for permanent basis and are subject to regular revision.
Question 19. Explain The Term Maximum Level Related To Inventory Levels?
Answer :
Maximum level : This is the top level which indicates that level of material stock should not exceed this level. If it does, it may involve blocking of funds in inventory which may be used for some other useful purposes.
This level is fixed after considering following factors:
Question 20. Explain The Term Minimum Level Related To Inventory Levels?
Answer :
Minimum level: This level is fixed below the re-order level but above the danger level. The level of stock should not be reduced below this level. If it does, then it involves the risk of non availability of material whenever required.
This level is fixed after considering two factors:
Question 21. Explain The Term Re-order Level Related To Inventory Levels?
Answer :
Re-order level: This level is fixed between maximum and minimum level in such a way that the requirement of materials for the production can be met properly till the fresh supply of material is received. This level of material stock indicates that steps should be taken for procurement of further lots of material.
Question 22. Explain The Term Danger Level Related To Inventory Levels?
Answer :
Danger level: This level is fixed below minimum level. If the stock reaches this level an immediate action must be taken by the company in respect of getting supply. This level indicates a panic situation for the company as it has to make purchases in a rush which may involve higher costs.
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