⁶QUESTION 2

Calculate the following:

a) Re-order level
=Max usage * Max lead time
= 4000 * 5
= 20 000

b) Economic Order Level

EOQ = √((2U*P)/S)
EOQ = √((2 * 36000 * 300)/ 0.5)
EOQ = √(21 600 000/ 0.5)
EOQ = √43 200 000
EOQ = 6 572.67069
EOQ = 6 572.67
EOQ = 6 573 Qty

c) Maximum Stock Level

MSL = (Reorder Level+ Reorder Quantity) – (Minimum Usage * Minimum lead time)
MSL = (20 000 + 6573) – (1 500 * 3)
MSL = 26 573 – 4 500
MSL = 22 073

d) Stock Turnover in days

ST = Cost of Goods/ Average Inventory
ST = (15 000- 13 000) * 38 / (15 000 * 38 – 13 000 * 40)
ST = 76 000/50 000 = 1.52
ST = 365/1.52 = 240.13 days
ST = 241days

QUESTION 3
Calculate the values of issues and the Closing stock using:-

a) First In First Out Method

DAT RECEIPTS (+) ISSUES (-) BALANCE
E
Quantit Pric Amoun Quantit Pric Amoun Quantit Pric Amoun
y e t y e t y e t
Jan 01 1000 P5.5 P5500 1000 P5.5 P5500
0 0
Jan 10 650 P5.5 P3575 350 P5.5 P1925
0 0
Jan 20 400 P5.6 P2240 350 P5.5 P1925
0 0
400 P5.6 P2240
0
Jan 23 350 P5.5 P1925 - - -
0
150 P5.6 P840 250 P5.6 P1400
0 0
Feb 3 200 P5.6 P1120 50 P5.6 P280
0 0
Mar 5 350 P5.9 P2065 50 P5.6 P280
0 0
350 P5.9 P2065
0
Apr 2 50 P5.6 P280 - - -
0
250 P5.9 P1475 100 P5.9 P590
0 0
Jun 700 P6.0 P4200 100 P5.9 P590
10 0 0
700 P6.0 P4200
0
Jul 10 100 P5.9 P590 - - -
0
650 P6.0 P2400 50 P6.0 P300
0 0
Jul 20 100 P6.2 P620 50 P6.0 P300
0 0
 100 P6.2 P620
0
Jul 30 50 P6.0 P300 - - -
0
50 P6.2 P310 50 P6.2 P310
0 0

ANS: Value of Issues is P310 and the Closing Stock is 50.

b) Last In First Out Method

DAT RECEIPTS (+) ISSUES (-) BALANCE
E
Quantity Price Amount Quantity Price Amount Quantity Price Amount
Jan 01 1000 P5.50 P5500 1000 P5.50 P5500
Jan 10 650 P5.5 P3575 350 P5.50 P1925
0
Jan 20 400 P5.60 P2240 350 P5.50 P1925
400 P5.60 P2240
Jan 23 400 P5.6 P2240 250 P5.50 P1375
0
100 P5.5 P550 - - -
0
Feb 3 200 P5.5 P1100 50 P5.50 P275
0
Mar 5 350 P5.90 P2065 50 P5.50 P275
350 P5.90 P2065
Apr 2 300 P5.9 P1770 50 P5.50 P275
0
50 P5.90 P296
Jun 10 700 P6.00 P4200 50 P5.50 P275
 50 P5.90 P296
700 P6.00 P4200
Jul 10 700 P6.0 P4200 50 P5.50 P275
0
50 P5.9 P296 - - -
0
- - -
Jul 20 100 P6.20 P620 50 P5.50 P275
100 P6.20 P620
Jul 30 100 P6.2 P620 - - -
0
50 P5.50 P275

ANS: Value of Issues is P275 and the Closing Stock is 50.

c) Weighted Average Price Method

DAT RECEIPTS (+) ISSUES (-) BALANCE

E
Quantity Price Amount Quantity Price Amount Quantity Price Amount
Jan 01 1000 P5.50 P5500 1000 P5.50 P5500
Jan 10 650 P5.5 P3575 350 P1925
0
Jan 20 400 P5.60 P2240 750 P4165
 Jan 23 400 P5.5 P2220 250 P1945
5
Feb 3 200 P7.7 P1100 50 P845
8
Mar 5 350 P5.90 P2065 400 P2910
Apr 2 300 P7.2 P1770 100 P1140
8
Jun 10 700 P6.00 P4200 800 P5340
Jul 10 750 P6.6 P5010 50 P330
8
Jul 20 100 P6.20 P620 150 P950
Jul 30 100 P6.3 P634 50 P317
3

ANS: Value of Issues is P317 and the Closing Stock is 50.

QUESTION 4
Calculate the total wages of employees using:-

i) Simple Time Rate System

EARNINGS = Number of Hours Worked * Pay Rate
EARNINGS SAM MOSES
Normal 48 * P10 = P480 48 * P12 = P576
Public Holidays Overtime 9 * (P10 *2) = P180 3 * (P12 * 2) = P72
Saturday Overtime 15 * (P10 * 1.50) = P225 18 * (P12 * 1.50) = P324
TOTAL P885 P972

ii) Halsey Scheme

EARNINGS = Time Taken * Time Rate + (Time Saved *Time Rate )* Bonus Rate
Therefore:-
SAM’s Earnings = 15 * 14 + (15 – 15) * 14 * 0.75
= 210 + 0
= P210
MOSES’s Earnings = 12 * 14 + (15 – 12) * 14 * 0.75
= 168 + 3 * 10.5
= P199.50