QUESTION 1

 Comel Bhd is a company that buys and sells computers. On 1 June 2013 it had 200 unsold computers in stock, each valued at RM800.

During June, the company received deliveries as follows:

 

DateNumber of computers

received

Unit costMarket

price

9100RM900RM 1,000
18200RM1,000RM 1,200
22100RM1,100RM 1,300

Also in June, the sales of computers were as follows:

 DateNumber of computers sold
13200
19250
 

 

 

27100
  • Prepare the Goods Ledger Card using the following methods:
  • LIFO (12 marks)
  • FIFO (12 marks)
  • Describe (do not calculate) how LIFO and FIFO affect the cost of goods sold and the valuation of closing stock:
  • when purchase prices are rising; (3 marks)
  • when purchase prices are falling (3 marks) (Total :30 marks)

QUESTION 2

 The following information relates to a component used in the manufacture of a single product:

Re-order quantity 2, 900 units
Usage per weekMaximum1,100 units
 Minimum900 units
Estimated delivery periodMaximum4 weeks
 Minimum2 weeks
REQUIRED  
  • Using the above data calculate the:
  • Re-order level
  • Maximum stock level
  • Minimum stock level
  • Average stock
  • Explain the purpose of setting the re-order level, maximum stock level and minimum stock level (9 marks) 

QUESTION 3

  • Wong Limited provides the following data for the year ending 31 December 2012
Finished goods

Expected sales (units):

AB
Johor2,0003,000
Melaka1,5002,500
Planned ending stock500600
Beginning stock300350

REQUIRED:

Prepare a production budget for the year (10 marks) 

  • Additional information for Wong Limited is as follows:
Direct materialsZ11Y22
Beginning stock (units)500600
Planned closing stock (units)4001,000
Cost per unit$5$8
Each unit of Product A requires 3 units of Z11 and 2 units of Y22 Each unit of Product B requires 2 units of Z11 and 1 units of Y22

REQUIRED: Prepare a materials budget for the year in both units and $. (15 marks)  

QUESTION 4

  • Explain what is “Just In Time” inventory (10 marks)

Explain the advantages and problems of JIT system (10 marks)

Answers to Above Questions

Answer 1: LIFO and FIFO are the important methods of inventory valuation, and they are utilised by different organisations depending on their requirements. The preparation of goods ledger card using the LIFO and FIFO method for Comel Bhd is performed as follows:

answer
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