SEMESTER MARCH – AUGUST 2021

CASE STUDY 3

ACC319

A State THREE (3) reasons for the discrepancies between physical stock and the
amount recorded in the bin card and the store ledger card.
(3 marks)

B. Briefly explain the benefit of calculating Economic Order Quantity.

(2 marks)

C. Radiohead Sdn Bhd produces a variety of headwear products. One of the materials
used is microfleece fabric, which is imported from Japan. The company keeps its
inventory based on LIFO (Last-In-First-Out) method. Their record discloses that 3,500
kilograms were in store at the beginning of the current period in November 2019, which
constitutes of 1,300 kilograms priced at RM12.00 purchased in October 2019, 700
kilograms priced at RM10.00 purchased in September 2019 and the balance, priced at
RM8.00 purchased in August 2019.
The following transactions took place in November 2019:
November
2019
5 Issue 2,800 kilograms to production department.
9 Purchase 1,900 kilograms at RM12.00 per kilogram.
12 Issue 1,400 kilograms to production department.
Purchase 4,200 kilograms at RM11.50 per kilogram. The price
15 stated is after the 15% trade discount given by the supplier due
to bulk purchase.
18 Purchase 1,500 kilograms at RM13.00 per kilogram.
21 Issue 1,800 kilograms to production department.
26 Issue 1,400 kilograms to production department.
Return to supplier 2,100 kilograms of material purchased on 15
28 November 2015.
29 Issue 200 kilograms to production department.

Physical stock count on 30 November 2019 revealed a balance of 1,250 kilograms.

Required:

a. Prepare the store ledger card for the month of November 2019.
(12 marks}

b. Determine the cost of material issued to the production department for the
month of November 2019.
(1 mark}
 CONFIDENTIAL 3 AC/MAR 2016/ACC319

D. Puspa llham Sdn Bhd manufactures 20,000 units of knitted tablecloth annually. Each
unit of the knitted tablecloth requires 3 meters of polyester fabric. The company's
costing officer records that the purchase price of the fabric is RM25.00 per meter. The
company must incur RM60 ordering cost per order and its stockholding cost per meteris
20% of the purchase price.

The production of knitted tablec l o t h is between 200 to 300 units per week and the
order will take place at a minimum of 2 weeks and maximum of 4 weeks.

Required:
Calculate for the polyester fabric:

i. Economic Order Quantity using the formula method.

ii. Reorder level point.
iii. Maximum stock level.
iv. Minimum stock level.

(10 marks)
(Total: 28 marks}