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:

 

Date Number of computers

received

Unit cost Market

price

9 100 RM900 RM 1,000
18 200 RM1,000 RM 1,200
22 100 RM1,100 RM 1,300

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

  Date Number of computers sold
13 200
19 250
 

 

 

27 100
  • 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 week Maximum 1,100 units
  Minimum 900 units
Estimated delivery period Maximum 4 weeks
  Minimum 2 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):

A B
Johor 2,000 3,000
Melaka 1,500 2,500
Planned ending stock 500 600
Beginning stock 300 350

REQUIRED:

Prepare a production budget for the year (10 marks) 

  • Additional information for Wong Limited is as follows:
Direct materials Z11 Y22
Beginning stock (units) 500 600
Planned closing stock (units) 400 1,000
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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