COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Meet specific customer requirements
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Produce at the least possible cost
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In order to ensure stock in anticipation of demand
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None of these
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Detailed explanation-1: -In inventory management, Economic Batch Quantity (EBQ), also known as Optimum Batch Quantity (OBQ) is a measure used to determine the quantity of units that can be produced at the minimum average costs in a given batch or product run.
Detailed explanation-2: -Minimum Batch Quantity means the minimum batch quantity set forth for each Supplied Product on Schedule 5. Minimum Batch Quantity means Seller’s then-current minimum batch size of one full lot quantity of Supplied Product, which as of the Effective Date is set forth on Schedule 1.1. 287.
Detailed explanation-3: -The formula for batch costing is as follows: Batch Costing = (Total Cost of Goods Produced / Number of Units Produced) x Number of Units in Batch. For example, if the total cost of goods produced is ₹100, 000 and the number of units produced is 10, 000, then the batch cost would be ₹10 per unit.
Detailed explanation-4: -One of the main limitations of Economic batch size is that it does not take into account the variable costs associated with production. This includes costs such as labor, materials, and overhead costs that can fluctuate from order to order.