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:
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