COSTING OF MATERIALS 1 Perpetual Inventory Cards. Ahmed EI, in its manufacturing operations a mater | polbwing are receipts and issues of E Conn. Apr. “lectronics produce electrical accessories. + ial named as “E Connector” is’ used. nector during the month of April: Received 200 units @ Rs. 8.00 Apr. . ‘50 units @ Rs.10.00 Apr.16 -100 units. Apr -120 units @ Rs.12.00 Apr. 170 units Required: Prepare Perpetual Inventory Cards and calculate cost of materials used and in inventory as on April 30 under each of the following methods: (a) FIFO Costing. (b) LIFO Costing. (c)Average Costing. Check figures: Cost of materials used (a) Rs.2,340 (b) Rs.2,740 (¢) Rs.2,540 Ending inventory (a) Rs.1,200 (b) Rs.800 (© Rs. 1,000 (ilustration 8-1 is related to.above exercise) ‘Scanned with CamScanner984 Partiv: Costing & Accounting for Product Cost Elements. 8:2, |Perpotual Inventory Cards. Hamid Herbal Products produces a hai Material 1 is one of the ingredients ofthis product. During the month af Que following were purchases and isues of material i Inventory: Oct. 1. Required: Compute cost of materials consunied, and cost of inventory atthe end of month, using perpetual inventory system with each ofthe following assumptions as to flow of materials: = (@ FIFO, (®) LIF, (© Average Cos Check figures: Cost of materials ised (a) Rs. 16,400 (6) Rs.17,000 (¢) Rs.16330 : Cost of ending inventory (a) RS. 3,825 (0) Rs. 3225 (0)Rs. 4.67 (llwstration 8-1 is related to above exercise)” 8-3. ‘Stores Ledger Cards. Mehmood Manufacturing Company uses-a material caled *M in its production process. Inventory of this item on May 1 was],800 units valued at Rs.43,200. Receipts and issues of material M during the month’ of May are as under: : Date Receipts Issues, May 8. 1,000 units at Rs.26,800 May 1 2,000 units May 24. 1,600 units at Rs.44,800 May 30. : 1,800 unis Required: Value of issues on May 16 and May 30; and value of stock on May 31 when issues are priced on: (@) FIFO basis" (b) LIFO basis (©) Moving average bass Check figures: Value of issue on May 16. (a) Rs.48,560- (by Rs. 50,800 {c) Rs.50,000 Value of issue on May 30 (a) Rs.49,440 (b) Rs.49,600 (c) Rs.48,600 Value of stock on May 31 (a) Rs.16,800 (6) Rs.14,400 (c) Rs.16,200 (Ullustration 8-1 is related to above exercist) ‘Scanned with CamScannerChapter 8: Materials Costing & Accounting 385 rials Ledger Cards. Qasim Chemical Company uses “Chemical K” as one ine its manufacturing operations. Inventory of this item of raw ofthe teva on December | consisted of 400 kg. costed at Rs.1,800. During the teil ig activity in raw material “Chemical K” w ott OT voice No.780: 250 kgcost Rs oes De4 © Requisition No.845: 200 kg Deel fies N07: 300A os R47. Be TG Requson No.3: 200k Bet) Requisition No 887250 wet 'No.802: 200 kg, cost Rs. 1,000 met tion No.909: 220 ke, pegeired: (1) Prepare material ledger cards showing date, invoice number, requisition number, unit cost and amount for the receipts and issues using: (a) FIFO costing. (8) LIFO costing. (¢) Moving-average costing. (2) Prepare a schedule showirig the cost attached to each requis for each method of pricing so the effect of the yarious methods (on costs may be compared. check figures: Total cost of material issued (a) FIFO Re 4,570 () LIFO Rs-4,668 (6) Moving average Rs.4,595 (Mliustration 8-1 is related to above exercise) {5 Stores Ledger Cards. Following information is available with respest 19 an we ofmaterials used by Aqib Industry in its manufacturing operations: 150 Ke. costed at Rs.6,000 October. 1 Inventory + October 6 -Purchased, 200 Kg. for Rs. 8,400 October 12.. sudssued 250Ke. October 18... -w-Purchased 100 Kg, for Rs. 4,400 : October 24 Purchased. "200 Kg. for Rs. 9,000 Ortober 30. Issued 250 Kg. inventory under the following Required: Cost of matérials used and cost of e perpetual inventory costing metho (a) FIFO. (b) LIFO. (©) Weighted average. (@) Most recent purchase price. Check figures: Cost of materials used (2) Rs. 21,050 0) Rs. 21,600 (@) Rs. 21,233 (d) Rs. 21,750 6,750 (0) Rs. 6,200 (¢) Rs. 6,567 (d) Rs. 6,050 {altustration 8-1 is related to above exercise) Cost of ending inventory (a) Rs. ~ AAT TEE ‘Scanned with CamScannerLedger Cards. Foilowing information pertain to one of th items in inventory of Feteh Furniture Factory: =” = ete ne ee ted Required: The cost of materials used during August and the cost assi rl st assigned to the nding inventory by each ofthe following perpetual inventory costing ‘methods: (@) FIFO. (b) LIFO. (©) Moving average. (@) Most regent purchase price, (Check figures: Cost of materials used (a) Rs. 10,450 (b) Rs. 11,519 (0) Rs. 10,970 (@) Rs. 12.155 Cost of ending inventory (a) Rs. 8,260 (b) Rs. 7,200 (c) Rs. 7,740 (d) Rs. 6,555 (Mltusraiion 8-1 is related to above exercise) 8-7. Stores Ledger Cards, Return of Specific Units to Storeroom. ‘Shahid Industrial Company. provides following information regarding. an item materials nama SL-7 Step. Ton Balance Step. 1"/ Received. of raw 100 sq.ft. @ Rs. 20 100 sq.ft. @ Rs. 22 Step.2 cone Issued sar 120 sq. Step. 3.neu Received nnn nonnnsinnwnnonnn on 200 sq.ft. @ Rs, 24 Step. 4... Returned to storeroom (treat asthe oldest issue) 20 sq.ft. Step. 5... Issued — 220 sqyft Required: Prepare Stores Ledger Cards under each of the following assumptions as to flow of materials cost: e (@) First in, First out, (b) Last-in, First out, and (©) Weighted Average Cost. . Check figures: Ending inventory (a) Rs. 1,920 (B) Rs. 1,600 (6) Rs. 1,852 (Detailed discussion of costing of returns to storeroom is at page No.314 Mlustrations 8-4, 8-5 and 8-6 are related to above exercise) 8-8. Perpetual Inventory Cards, Return to Supplier, Specific Price Available. Following transactions relate to an.item of materials coded as T-29 used by Hashit = pe ~~~ Scanned with CamScannerr Chapter 8: Materials Costing & Accounting 387 facturing operations: 200 units @ Rs. 25 300 units @ Rs. 27 red: Prepare Perpetual Inventory Cards and calculate cost of material used equi ‘ending inventory under each of the following metho (@) Fist in, First out, (6) Last-in, First out, and (©) Average Costing i check figures: Cost of material used: (i) Rs. 19,750 () Rs, 20,500 (c) Rs. 19,988 Ending inventory (a) Rs. 6,600 (6) Rs. 5,850 (c) Rs. 6,362 iscussion of costing of returns to supplier is at page NO.31! and costing of returns fo storercom is at page No.3. Musirations 8-4, 8-5 and 8-6 are : ‘related 0 above exercise) pacaited di 8, Perpetual Inventory Cards, Return to Supplier, Specific Price Not Availabl. ‘ns ofthe raw materials used by Rasheed Rubber Factory isa chemical called R-33. erfowing information shows movement ofthis chemical in storeroom: Balance b/d : sensu 100 Liters @ Rs. 40 “50 Liters @ Rs. 42 100 Liters @ Rs. 44 200 Liters 150 Liters @ Rs.45 20 Liters 20 Liters 100 Liters @ Rs. 46 00 Liters Required: Prepare Perpetual Inventory Cards and compute cost of material issued and. cost of ending inventory under following methods: First out, : First out, and (©) Average Costing. ‘Scanned with CamScanner18 Pareiv: Costing & Accounting fr Product Cost Elements Check figures: Cost of material issted: (a) Rs.16,370 (b) R16, 700 (e) Rs Ending inventory (a) Rs. 4,600 (b) Rs. 4,250 (c) Re, 6507, 4503 etaited discussion ofcosing of returns to supplier ia page NO311 and costing oy ‘returns to storéroom is at page No.314. Mlustrations 6-4, 8-5 and .¢ related 10 above exerour’ : ite) 8-10. Materials Ledger Cards, Returns to ‘Supplier and Storeroom. Mastioog Manufacturing Company provides following information as'to inventory changes of ‘material MM-99 during the month of October 208x: et. Tan Balance bid Oct. 2.....Purchased Det. Teer BSSUCM seis 300 kg Oct.11... Purchased . sr 00 ke @Rs, 4.59 (061.17... Returned to supplier 150 ke purchased on Oct. 2, 20xx. 001.23. ee 01.25. Oct.31 Requiréd: "Prepare Materials Ledger Cards under: (@) FIFO (b)/ACM — (@) LIFO Check figures: Cost of material isswed (a) Rs.3,100 (b) Rs.3,147 (e) Hs.3,185 Ending inventory (a) Rs. 900 (6) Rs. 853 (6) Rs. 80) (Mustrations 4, 8-5 and 86 are related to above exercise) 8-11, Stofes Ledger Cards, Obsolete and Excess Stock. Basheer Bakers at the beginning of January had in ts storerom 300 Ibs, of “Com Flour” costed at Rs7.0 per Following information shows movements of this material during the month of Janay: Jan. 3 Purchased 1,200 Ibs. @ Rs. 6.00 per Ib. Jan. 7 Issued 500 Ibs. to Batch No. 101. Jan. 9 30 Ibs. deteriorated in quality and transferred to obsolete stock, Jan. 12 Issued 600 Ibs. to Batch No. 102. Jan. 17 Purchased 1,000 Ibs. @ Rs. 6.50 per Ib, Jan. 23° Purchased 500 Ibs. @ Rs. 5.00 per Ib, Jan.27 Issued 500 Ibs. to Batch No. 103 Jan. 31 Excess material found in stock 80 Ibs. |e was ascertained that this excess resulted due to wrong measure used during the month. Required: Prepare Stores Ledger Cards using LIFO and FIFO ‘costing methods ‘Scanned with CamScanner,a (Chapter &: Materials ~Costing & Accounting 389 (Check figures: Cost of material issued: (a) Rs 8,880 ()Rs.9,625 Ending inventory LIFO Rs.9.420 FIFO Re 8.675 nates ledger ards units transferred fo obsolete stock ae treated like units issued ofactory and excess units found instock are treated as unis returned by factory £0 ‘sloreroom. Illustrations 8-4, -5 and 8-6 are related fo above exercise) $12, Perpetual Inventory System, Calculation of GS, and Finished Goods inventory. Nazer Indusval Works produces a product. The prodeton requires only one al called JT-10. Following are receipts and issues of the material during a week. a2 500 units @ Rs. 12.00 Balance b/d... Received .. 2,500 units @ Rs. 14.00 Issued. 3,000 units Received 2,000 units @ Rs. 15.00 Ps ae 2,500 units and factory overhead is applied at the the product were manufactured and sf work in process and finished Direct labour forthe week totaled Rs. 120,000 fate of 60% of direct labour eos. 5,000 units o 13000 units were sold. There were no inventories o oods at beginning ofthe week, No work was Ie in proces atthe end of week. (1) Prepare stores ledge cards under FIFO and L1FO. (2) Calculate cost of goods sol! and cost of closing finished goods fnventory under FIFO and LIFO. Check figures: (I) Cast of material used: FIFO Rs.72,500 LIFO Re.77,000 ‘losing ventory of materia! FIFO Rs. 22500 LIFO Rs. 18,000 {) CGS. FIFO Rs. 211,600 LIFO Rs. 215.200 Closing ventory of fished goods FIFO Rs. 52,900 LIFO Rs. $3,800 (lusrarion 8-2 is elated to above exercise) wentory System in Trading Concern, Income Statement. Hashmi 813. Perpetual Im a rere Oot pada cals HTC. Infomation blow som sock. Ieper of te compan Receipts ime Date vats [HT ae [HON un nef ames | ooe | ancO| Nov. 10] Purchases 100 [95 Nov. 20} Purchases al Nov. 28 | Purchases 88 “Scanned with CamScanner7 an oitng 8 Accounting for Product Cost Elements Sales were 330 units @ Rs. 150. Marketing and administration expenses wire 6,000 and Rs. 2,00 respectively Required: (@) Fi ‘value of ending inventory using (i) FIFO method, (i) Ling method. Prepare ative Income Statements based on above 0 eee ation ane 2 LIFO methods of materials costing. Check figures: (a) Value of ending inventory () Rs.15,100 (i) Rs.15,459 () Net proft (i) Rs.10,300 (i) Rs. 10,650 (ustration 8-2 is related to above exercise) 8-44, Inventory Valuation, Periodic Inventory System. The inventory on December 1, 20sx of a particular class of merchandise of Aziz Corporation consisted of 150 Units priced at a cost of Rs.160. Purchases during the month were as follow: Date Quantity, Unit Cost Amount Dec. 6 120 Units Rs.155 Rs.18,600, Dec. 12 150 Units Rs.150 Rs.22,500 Dee. 14 100 Units Rs.165, Rs.16,500 Dee. 18 75 Units Rs.170 Rs12,750 Dec, 23 130 Units RS.175 Rs.22.750 Total; 575 Units Rs.93,100__ ‘Upto December 31" al the inventory was soldat Rs,250 per unit except 320 units Compute: (i) The value of ciosing inventory using: (a) Weighted average, (b) FIFO and (©) LIFo. i) Gross profit under each of the above methods. Check figures: (i) Closing inventory: (a) Rs.51,686 (b) Rs.54,250 (c) Rs.50,100 (@) Gross profit: (a) Rs, 35,836 (6) Rs. 38,400 (c) Rs.34,250 (Mlustration 8-3 is related to above exercise) £15 Profit Calculation, Periodic Inventory System, In pricing the gallons of petrol Bo sevice station ‘A’ follows the frst-in-fist-out method while series sation 9" follows last-in-first-out method, On 1* January both had the same quantity in stock 2.000 gallons at Rs.260 per gallon. During the month each stating reerieg zddtional supplies of 6,000 gallons at Rs. 275 per gallon Sales for each of thane es ‘Scanned with CamScanner,chapter: Materials Costing & Accounting 304 1FO Rs. 850,000 LIFO Rs. 832,000 Check figures: Closing stock FIf ‘Profit earned FIFO Rs, 222,000 LIFO Rs. 174,000 (ltusration 8-3 i related to above exercise) | DEFECTIVE AND SPOILED PRODUCTION 4.16, Rework on Defective Production.” tn response toa customer's ove Mujtabs epvactring Company produced 200 units of a product. For production of der initially the company incured following costs: Direct materials. ieee .RS:24,000 CoS, 8,000 Direct labour. - ‘quality checkers detested some defective units. In order to remove these, defects the company incurred following additional costs: Direct materials. = ' Rs.950 Direct labour. . i R8.600 ‘The company applies factory overhead at the rate of 75% of direct labour cos. Required: (9) Pass joural entries to record production of this order when: (a) Cost of rework is charged to the order. {b) Cost of rework is charged to entre production of accounting period. | (i) Calculate cost per unit under both ofthe above conditions. Check figures: Cost per unit (a) Rs.200 (0) Rs.190 |. Murtaza Embroidery Works received an ly the factory incurred following costs for | 17. Rework on Defective Product order of 1,200 units ofits product. Initial production of this order: ee seven. 120 per nit Direct materials. Direct labour... — vntnnnnRS.280 per unit Factory overhcad is applied to production at the rate of 25% of direct labour cost In order for rectify defects in some of the units following additional costs were incurred: Direot materials 7 ene ae Rs, 4,000 Direct labour: so R8.16,000 Factory overhead at applied rte. Te completed order was shipped to customer at contacted price of Rs.625 per unit. (Pass journal entries for production and shipment of this order under each of the followiig assumptions: (@) Cost of rework to rectify defects is considered to be due to peculiar and strict specifications ofthe customer. Requi ‘Scanned with CamScanner382 Partiv: Costing & Accounting for Product Cost Elements. I oy | : | rectify defects is considered as normal, { (ip Gdeattc co pr nt uaerbotno te tov sung + Chesk figures: Cost per uni) Rs 490 Re 4rg | : on, Muzzemmil Foundry “received_an order fy i: ree me as of 8 od at A price of R120 per’ ont Por | Produ of tis er dest mate of R40 000 wer sed to eon labour or production ofthis onder foaled S.1,000 and factory overhead apt At the rate oF 66% % of tet labour cost oe er of competi facturing process quality inspectors reject a chet en ge ely rt ed erat © Bae atts ete sped to customer ani pod nts Were sod 10a tgp dealer. All sales were for cash Required: ()) Pass journal entries under the flowing assumptio (@) "Pas journal entries if cost of spoilage is charged to the order. (©) Pas joural entries if cost of spoilage is spread over entice production of accounting year. (Caleta cost per good uni under both of the above assumptions, Check figures: () Cost of fnshed goods 85.72 609 ‘ ©) Cox of spoilage Rs.2,100, Cost of finished goods Rs Gay (Cost per good unit (a) RS.72.25 () Reve 849. Spoiled Production, Muddasser Mould Makers re Units of a cerain type of mould. In view of expected s Diner seated For production ofthis order following costs were Insurer Direct materials... : Rs.40 per unit + Direct labour. ms : 7 + RS.60 per unit Factory overhead. nn ceived an otder for 1 spoilage production of 1/600 ‘The spoiled ‘0 per unit. Allof the good units were petted bythe customer atthe contracted prise of RS.200 per ut Required: (i) Pass journal entries if: (@) ~The spoilage is due of the customer. (©) The spoilage is normal, Caleulate cost per good unit under both ofthe above conditions. Check figures: () (a) Cost of finished goods Rs 190300 ©) Cost of spi ilage Rs. 4,500, Cost Of finished goods Rs. 186,000 ‘0 peculiar and unusual specifications 0) ‘Scanned with CamScanneree Chapter 8: Materials —Costing & Accounting 399 (ii Cost per good unit (a) Rs. 122.90 (b) Rs.120. polled & Defective Production. job fr production of 100 unt sent to $20. ty Mateen Manufacturers. Cost elements per unt are: fictOoY [Rs.700 per unit Direct materials. Direct labour. 'Rs.500 per unit Factory overhetd nn ——— Rs.400 per unit Quality inspection detects afew defective units. Cost of rework on defective unis includes: Direct materials seninarenanne RS 1200 Direct labour Rs.1,000 Factory ovethe “Rs, 800 Sunits are rejected by quality inspectors as being spoiled. A scrap dealer buys these units for eash ata price of Rs.800 per unit ‘The customer takes delivery of good units and pays cash atthe contracted rate of £Rs.2,000 per unit. Required: (J). Pass journal entries if (@) The spoilage is due to peculiar and unusual specifications of the customer. (&) The spoilage is noimal and arises even under efficient working conditions. (ip) Cateulate cost per good unit under both ofthe above conditions. Check figures: (i) (a) Cost of finished goods Rs. 159,000 (9 @) Cost of spoilage Bs-4,000, Cost of finished goods Rs 182,000 {ii Cost por good unit (a) Rs 1,673.68 () Rs 600. 2.21, Spoiled Production, Tayyab Chemical Company receives an order for raduetion of 360 kp ofa certain chemical ata pie of Rs.1S00 per kg) The artvey in aniiption of polage stated production of 400 kg, Inia ost incured for production of this order is as follow: Dizect materials. = Rs 340,000 Diect labour. s.120,000 | Factory overhead Sct of direct labour cst rid defective. The defect is rectified On final inspection 40 kg. of the chemical is by incurrenee of following additional cost Direct mat = Direct labour. Factory overhead. : : On final inspection 20 kg. of the chemical is production ean be sold for Rs.400 per kg, RRs.10,000 Rs.1,500 i ‘i of direc labour cost itegorized as spoiled. ‘The spoiled ee a ore BeannedwihCamscanner394 Partiv: Costing & Accounting for Product Cost Elements. ‘The customer accepted delivery of 380 kg. of good chemical and paid contacted. Spel jotucan gol forcashtonszrp dea Required: (i) Pass journal entries to record the production of order and sale of ‘Rood and spoiled units under both of the following assumptions as, to charge ofthe additional costs: (@) When costs of rework and spoilage are charged tothe jo, (©) When costs of rework and spoilage are charged to entre production of the period. id) Calculate cost per kg. of good chemical produced under both of the above conditions. ‘Check figures: (I) Cost of finished goods Rs:504,000 2) Cost of spoilage Rs.17,000, Cost of finished goods Rs.475,000 ECONOMIC ORDER QUANTITY 8-22, E.0.Q. Tayyab Industry’ uses a raw material called T.1.786. Following data pertain to acquisition of this raw material: ‘Available Data: ‘Annual requirement of T.1.786. 180,000 Sq, R, Purchase price of 1.786. “-Rs.50 per Sq. Ordering cost. “-RS.125 per order sence Carrying cost of inventory. Required: (i) Economic order quantity. (Gil) Number of orders to be placed during the year. (iii) Proof of economic order quantity calculated in (9). Check figure: E.0.0. 3,000 Sq, Fi, Number of orders per year 60. 8-23, £.0.0. . Mansoor Machinery Works estimates its annual’ requirement of a certain type of ball bearing is 20,000 units. Inventory carrying cost is 8% and ordering cost is Rs. $0 per order. Purchase price of this type of ball bearing is Rs.100 per unit. Required: (1). What is the most economical number of units to order? (2) Number of orders to be'placed in a year. ) About how often will be placed? (4) Proof of correctness of your answer for (1) in the form of a table. Check figures: (I) 500 units, (2) 40 orders, (3) 9 days met ‘Scanned with CamScanner_ . CCoapter B Mateiats ~Costing & ecounting 395 24, £.0.2, Carrying cost = Storing cost + Itorest. ost is Oo a oo ons ne wah ropes eri Shemical ‘Annual requirement Cott to place an order... A o ‘Annval interest rate... ee ee ‘Annual storage cost per unit : oe SS come s “Rs 40 required: (1) Economic order quantity (Q) Number of orders per yer (3) Frequency of orders. 4) Proof of correctness of (4) Prot of eects of cna re qu a inh, eee parr) 2400 ters (2) 27 orders (3) 14 days £25, £.0.0,, Caleulation of Savin ' jc Hebel Prods inate itsseaeene of tte ho S00 va ig eae uc pe tthe eb i as pedo DHS pr eam, Ail arg am ns. poy ofthe company incest aft ein ventory. Ordering cos estima is 300 per ordet Presently the company buys in four quarter orders fof 14,400 grams. Required: (i) Economic order quanti, saving forthe coming yer ifthe company buys in economic order quantity. Check figures: (9 2400 grams, (i) Rs 30.000 Saving, Hafiz Industrial Works purchases © certain isa six months? supply. The cost 8.26. £.0.Q,, Calculation of arrying cost is 20%. 876 raw materials in lots of 9,600 ws per unit i Rs. 40, ordering cost § Rs. 75 pero Required: How much can the company can economical lots? ‘Check figures: £.0.0. 600 units der and c save per year by buying in t Annual saving RS. 33,750 he most Kamil Chemical Factory buys an PST of ‘the material in each order Jculation of Saving Ordering cost i Rs totes 50 per kg. It buys 7,500 uns © erro meet its annusl requirement 827. £.0.2, Cal saterial at a price and places 3 orders pet Ye per order and carrying COS! of inventory i afevate annual saving ithe cOmPAnY Gn economic order quantity Ceck figures: £.0-0. 1500 sits, An sakes purchases of this material cal saving Rs. 12,000 aA eer oo TL ‘Scanned with CamScannera 396 Pars: Costing & Accounting for Product Cost Elements, INVENTORY LEVELS 8-28. Inventory Levels. Sadiq Cycle Company provides you following data as tg one ofits inventory items : Economic order quantity. +200 units 150 units 250 units Bdays Minimum inventory level Check figures: (i) 2,000 units (i) 3,300 units ii) 400 units 8-29 Inventory Levels, Varying Lead Time, The following information are available With respect to a material used by Amin Industry in its manufacturing operations: ‘Normal consumption.. : 1,600 kg. per week imum consumption. 1,400 kg, per week Maximum consumption... + 1,800 kg, per week Economic order quantity. 6,000 units Re-order period. 4 to 6 weeks Required: (a) Reorder level. (b) Minimum stock level. (© Maximum stock level ‘Check figures: (a) 10,800 kg. (b) 2,800 kg. (c) 11,200 k, 8-30. Inventory Levels, Varying Lead Time. Mamoon Manufacturers’ prepared following forecast to control one of the item in its raw materials inventory: ‘Average daily requirement, Maximum daily requirement Minimum daily requirement. Economic order quantity... Time required forthe receipt... Time to get emergency supply... Required: (a) Ordering Point. (6) Minimum Limit (© Maximum Limit (@) Danger Limit. ‘Check figures: (a) 1,500 units, 6) 600 units, (c) 2,100 units, (@) 100 units 20 units 30 units 10 units 1,000 units sonst 10 50 days 2 5 days ‘Scanned with CamScannerro Levels. Marhoon Industries has prepared following consumption Chaper8: Matas —cotng count 397 gst. Inventor Secast of material ‘Mt for the second half year: Month Consumption 22,200 units 24,000 units 23,500 units 24,500 units 26,000 units nits : fies nooally takes 30 days o recive the consignment of material Mater the issue of | gPurchase Reston | equired: (8) The order point forthe second half ofthe yer. } (©) The minimum inventory for the second half ofthe year. (©). The maximum inventory forthe second half ofthe year assuming the standard order quantity as 32,000 units. Check figures: (a) 26,000 units, () 1,800 units, (c) 35,800 units 1432, ventory Levels. Average, daily requirement of 6" diameter dsh-shaped nding wheel 3 pieces. Time required to scare delivery fom the usual spp er ero weeks. From the Tetords of Novelty Tools Works it is found that maximuny A caiement of the wheel in any month of 4 weeks does not exceed 100 pects and during any such period isnot likely to fall below 50 pieces. minimum requirement You are asked to fix minimum and maximum limits and also the ordering level Nodame the evonomic order quantity to be 5 dozens. If 2 days are sufficient to oveive emergency supply, fix also the danger evel Check figures: Ordering level 50 pieces ‘Minimin limit (assuming 6 working days in a week) 14 pieces “Maximum limit 85 pieces, Danger level 6 pieces {£33, Inventory Levels. rom the books and records of Mobeen Art Press tis found flarsverage delly requirement of 2030-90 gmat paper is SO reams. ‘Maximum vs eauirement of the art pope does rat exceed 2500 reams and minimum mom et during any month snot likely to fal below 1000 reams. Time required Hance delivery ftom supplier i usually 15 days. Economic order quantity is 1,200 Required: Determine minimum and maximum limits and also order level. If three Maye are sufficient to receive emergency supply, determine danger level also. f | “Scanned with camscannera 398 Partiv: Costing & Accounting for Product Cost Elements. See aS Bag 8-34. Inventory Levels. Following dada are taken from records of Siraj Food with respect to-a specific type of cooking oil ao Minimum usage... Maximum daily requirement. Maximum stock level Lead time. Required: (i) Order Point, i). Economic Order Quantity. Check figures: () 9,600 liters, (1) $,000 titers 8:36, Inventory Levels. ‘The following information is available in respect of component D20: ‘Maximum stock level 8,400 units Budgeted consumption ‘Maximum 1,500 units per month Minimum 800 units per month Estimated delivery period ‘Maximum 4 months Minimum 2 months Required:. () Re-order level. id) Re-order quantity. Check figures: ()) 6,000 units, it) 4,000 unite 8:36. Inventory Levels. ‘Muneer Marble Factory provides following data to develop various inventory control models for an item of raw materials: Lead time Maximum requirement per day.. Minimum requirement per day . Average requirement per day.. Economic order quantity ‘The company maintains a safety stock of 140 pieces, You are required to determine the following: Q) Ordering level. @) Minimum level (3) Absolute’ maximum level. (4) Normal maximum level. (5) Average level. 1,000 pieces ‘Scanned with CamScannerChapter 8: Motels Costing & Aecouting 399 | (e_Danger level time reuted fr emergency supplies is one day. “Check figures: (1) 840 paces (2) 140 pieces, 3) L440 Piss (4) 1,140 pieces, (5) 640 pleces, (6) 70 ieces. ry Levels, Adil Auto Industry provides folowing data with respect to ponent in its products: em used a 600 3,400 units per week rAverage USAge: ‘Maximum usage-. 000 units per week ‘Minimum usage "7" 2,800 units per week: Safety stock. 8,000 units Beonomic order quantity 12,000 units per order Lead time. 4 to 5 weeks ‘Lead time fo get emergency supply 2 weeks Required: (1) Order point. @)_ Minimum inventory level {G) Absolute maximum inventory level (4). Normal maximum inventory level (5) - Average inventory level, (6) Danger level : ‘Chock fignes: (1) 23,300 its, (2) 000 us, 24,100 units, (5) 14,000 units, (6) 6,800 sts: (4) 20,000 unit ——— “Scanned with camScanner