TEST 1

ACC116
INTRODUCTION TO COST ACCOUNTING
MARCH – JULY 2022

ANSWER ALL QUESTIONS

QUESTION 1

Petra Sdn Bhd is a distributor of microchips for the local computer industry. Due to a high
demand for personal computers, the management recognizes the need to maintain an efficient
stock control. The following data are available from the company’s records:

1. Expected demand for microchips is 158 units per day.

2. The purchase price for each microchip is RM49.

3. Ordering cost which also includes staffing cost incurred by the purchasing department
amounted to RM200 per order.

4. The microchips manufacturer charges the company RM139 for freight and forwarding
per order.

5. Additional warehouse space to store the microchips will have to be rented at the rate
of RM18 per microchips.

6. Breakage cost is estimated at 4% of the purchase price.

7. Petra Sdn Bhd has a 200 working day per calendar year.

8. It takes between 20 to 26 days for the microchips to be delivered to Petra Sdn Bhd.

9. The weekly production of microchips is between 550 to 650 units.

Required:

Using the information stated above:

a. Calculate the following:

i. Economic Order Quantity (using the formula method)

ii. Reorder level

iii. Maximum stock level

iv. Minimum stock level

b. Compute the economic order quantity (EOQ) for the microchips by using the tabulation
method if the number of orders given are 13, 15, 39 and 65 times per annum.
(18 marks)

QUESTION 2

Canary Bhd is a manufacturing company that produces soft toys. One of the material used in
the production is high quality cotton. The company value its stock using the “First-In-First-Out
(FIFO) method.

Each unit of soft toy requires 50 grams of cotton. The inventory record from the store disclosed
an opening balance of 7,800 grams of cotton valued at RM9,360.

The following transactions occurred in April 2022.

Date Transaction
2 Received 6,900 grams at RM1.80 per gram
9 Issued 11,000 grams
12 Received 5,400 grams at RM1.50 per gram
14 Issued 3,250 grams
20 Returned 1,300 grams received on 12 April to the supplier
22 Issued 2,000 grams
24 The production department returned 520 grams in excess taken from the latest
issue
25 Received 5,600 grams at RM1.70 per gram
28 Returned 600 grams received on 25 April to the supplier
29 Issued 2,400 grams

On 30 April 2022, the physical stock count showed a of balance of 5,500 grams.

Required:

a. Prepare a Store Ledger Card for cotton for month of April 2022.

b. Identify the value of closing stock of cotton.

(15 marks)

QUESTION 3

a. Briefly explain four (4) advantages of perpetual inventory system.

b. Identify three (3) causes of stock discrepancies.

(7 marks)
(Total: 40 marks)
END OF QUESTION