A firm's 'Re-order Level' is calculated as: MCQ with Answer and Explanation

A firm's 'Re-order Level' is calculated as:
A. Minimum consumption * minimum lead time
B. Maximum consumption * maximum lead time
C. Average consumption * average lead time
D. Maximum consumption * minimum lead time
Answer: Option B
Solution (By JKSSB Mock Tests)
Re-order level = Maximum consumption * Maximum lead time, ensuring stock doesn't run out.

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Practice More Accountancy and Book Keeping Questions

Question #1
Under the Income Tax Act, the deduction under Section 80D for health insurance premiums paid for self, spouse, and dependent children is:
A. ₹75,000 for individuals below 60 years
B. ₹50,000 for individuals below 60 years
C. ₹25,000 for individuals below 60 years
D. ₹25,000 for senior citizens

Correct Answer: Option C


Explanation:
Section 80D allows a deduction of up to ₹25,000 for health insurance premiums paid for self, spouse, and dependent children (if below 60 years). For senior citizens, the limit is ₹50,000.

Question #2
In a non-profit organization, the excess of income over expenditure is called:
A. Net revenue
B. Net income
C. Surplus
D. Profit

Correct Answer: Option C


Explanation:
Non-profit organizations use the term surplus (not profit) for excess of income over expenditure, shown in Income and Expenditure Account.

Question #3
A: Flexible budget is prepared for a range of activity levels. R: It helps in performance evaluation at different actual activity levels. Choose the correct option.
A. A is false but R is true
B. A is true but R is false
C. Both A and R are true but R is NOT the correct explanation of A
D. Both A and R are true and R is the correct explanation of A

Correct Answer: Option D


Explanation:
A flexible budget is designed to change with the level of activity, providing budgeted costs for various levels. This allows management to compare actual performance with the budgeted costs for the *actual* level of activity, aiding in fair performance evaluation. R correctly explains A.