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Hi, I need help on this question
A company has the following data;
Economic order quantity =21.9 metres
Minimum Level = 10
Maximum Level = 40
Average Level = 20.99 metresHow would you know whether or not they are adhering to control limits?
You wouldn’t, because you are not told what the control limits are!!
I don’t know where you found this question but as it stands it is a silly question (and presumably you have an answer anyway in the same book in which you found the question).
How would you find the control limits?
Could it be related to the FIFO method
There’s no answer in the book
It is certainly nothing to do with FIFO (or any other method of valuation).
I suppose the minimum and maximum values could be viewed as control limits, but that would mean setting the limits in advance which is not what the question says.
You really should use one of the Revision Kits from one of the ACCA approved publishers because they have answers in the books, and practicing questions for which you do not have answers really is wasting your time.
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