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carolinejonsson
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Explain prime cost?
The cost of direct materials, direct labour and other direct costs of production.
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Explain production overhead?
The total of indirect material, indirect labour and other indirect costs of production
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explain total product cost?
Prime cost+ producation overhead cost
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Describe stock control/ materials control procedures?
- 1. Production manager takes decision on the minimum level of stock to be held
- 2. Storekeeper makes regular checks of physical stock levels against minimum requirements. When stock has fallen to minimum level, storekeeper sends a request to the buying department for replacement items to be purchased.
- 3. Buying department sends an order to the supplier
- 4. Materials arrive and are received by storekeeper
- 5. Suppliers invoice is received by accounts department
- 6. Storekeeper issues materials to production department on the basis of a requisition note
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What is included in materials handling and control documents?
- Purchase requisition
- Purchase order
- Goods received note
- Suppliers invoice
- Stores requisition
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Explain waste and scrap?
- Waste: Materials that have no value
- Scrap: Waste material that can be sold for disposal, usually at a low price
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Describe the Costs when input prices are changing?
- First-in-first-out (fifo)
- -Assume that the goods which arrived first are issued first
- Last-in-first-out (lifo)
- -Assume that the goods which arrived last are issued first
- Average cost
- -Assume that all goods are issued at the average price of the stock held
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What types of pay schemes is there in labour costs?
- Monthly salary
- Basic salary plus extra payments depending on output levels or targets achieved
- Hourly rate based on actual hours worked
- Piecework based on number of items of output or units of service
- Benefits in kind
- Employrs labour costs, such as employers contributaions to national insurance
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