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I’m so sorry for what did happen to you. Anyway, thanks so much for your very useful story. I’m Nhu, from Viet Nam. Nice to meet you:)
As I know, Safety stock also known as Min stock or inventory ( in this case) and buffer stock. So we have Min inventory is 600.
By the way, we have Min inventory= reorder level – average usage * average lead time
600 = Reorder level – ( 400+200)/2 * ( 10+15)/2
Reorder level = 4350
Max inventory = Reorder level + reorder quantity – Min usage * Min Lead time
= 4350 + 3600 – 200*10
= 5950
* Note : in this case you can not use the fomula Reorder Level = Max usage * Max lead time. Because that only use for non-constant demand. In this case they did not mention it. So we need to start from Safety Stock.
:D. That’s my own idea, I’m just a fresh ACCA learner>….< so Mistake is not avoided.. check it for me. thanksa.
12000 litters should have cost : 12000*2.5=30000
But actually it costed 12000*2.5*1.04=31200
So the dircect material variance = 1200
b.
standard material cost for the standard production= 12000*2.5=30000
material usage variance = 1815 (F)
standard material cost for the actual production = 30000+1815=31815
Actual production = 31815/( 2.5*10.5)=1212