Financial Management Bachelors of Business (Specialized · PDF fileFinancial Management...

Chapter 1: Introduction to Cost Accounting 2016

1 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Financial Management

Bachelors of Business (Specialized in

Finance) –Tutorial Questions

Chapter 2: Accounting for Materials

Chapter 1: Introduction to Cost Accounting 2016

2 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Practice Questions

Question 1

Question 2

Question 3

Question 4

Chapter 1: Introduction to Cost Accounting 2016

3 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 5

Question 6

Question 7

Question 8

Chapter 1: Introduction to Cost Accounting 2016

4 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 9

Question 10

Question 11

Question 12

Chapter 1: Introduction to Cost Accounting 2016

5 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 13

A wholesaler has 8,450 units outstanding for part X 100 on existing customers’ orders; there are

3,925 units in inventory and the calculated free inventory is 5,525 units.

How many units does the wholesaler have an order with his supplier?

Question 14

A large retailer with multiple outlets maintains a central warehouse from which the outlets are

supplied. The following information is available for Part Number SF525.

Average usage 350 per day

Minimum usage 180 per day

Maximum usage 420 per day

Lead time for replenishment 11-15 days

Re – order quantity 6,500 units

Re – order level 6,300 units

a. Based on the data above, what is the maximum level of inventory?

b. Based on the data above, what is the approximate number of Part Number SF525 carried

as buffer inventory?

Question 15

A company is able to manufacture its own components for inventory at the rate of 4,000 units a

week. Demand for the component is at the rate of 2,000 units a week. Set up costs for each

production run are $50. The cost of holding one unit of inventory is $0.001 a week.

Required

Calculate the economic production run.

Chapter 1: Introduction to Cost Accounting 2016

6 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 16

A company uses an item of inventory as follows:

Purchase price $96 per unit

Annual demand 4,000 units

Ordering cost $300

Annual holding cost 10% of purchase price

Economic order quantity 500 units

Required

Ascertain whether the company should order 1,000 units at a time in order to secure an 8%

discount.

Question 17

A domestic appliance retailer with multiple outlets sells a popular toaster known as the Autocrisp

2000, for which the following information is available.

Average sales 85 per day

Maximum sales 105 per days

Minimum sales 60 per day

Lead time 14 – 20 days

Reorder quantity 1,850

Required

a. Based on the above data, at what level of inventory would a replenishment order be

issued?

b. Based on the above data, what is the maximum inventory level?

Chapter 1: Introduction to Cost Accounting 2016

7 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 18

The demand for a product is 13,550 units for a three month period. Each unit of product has a

purchase price of $18 and ordering cost are $23 per order placed.

The annual holding cost of one unit of product is 10% of its purchase price.

What is the EOQ (to the nearest unit)?

Question 19

ABC Co gradually receives its re-supply of inventory at a rate of 10,000 units a week. Other

information is available as follows.

Weekly demand 6,000 units

Set-up costs for each production run $165

Weekly cost of holding one unit $0.0075

What is the economic production run?

Question 20

Chapter 1: Introduction to Cost Accounting 2016

8 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 21

Question 22

Chapter 1: Introduction to Cost Accounting 2016

9 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 23

Question 24

Chapter 1: Introduction to Cost Accounting 2016

10 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 25

Question 26

Chapter 1: Introduction to Cost Accounting 2016

11 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 27

Question 28

Question 29

Chapter 1: Introduction to Cost Accounting 2016

12 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 30

Question 31

Question 32

Question 33

Question 34

Chapter 1: Introduction to Cost Accounting 2016

13 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 35

Chapter 1: Introduction to Cost Accounting 2016

14 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 36

Chapter 1: Introduction to Cost Accounting 2016

15 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 37

Chapter 1: Introduction to Cost Accounting 2016

16 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 38

Question 39

Chapter 1: Introduction to Cost Accounting 2016

17 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 40

Question 41

Question 42

Chapter 1: Introduction to Cost Accounting 2016

18 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 43

Chapter 1: Introduction to Cost Accounting 2016

19 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 44

Question 45

Chapter 1: Introduction to Cost Accounting 2016

20 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 46

Question 47

Chapter 1: Introduction to Cost Accounting 2016

21 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 48

Question 49

Chapter 1: Introduction to Cost Accounting 2016

22 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 50

Question 51

Chapter 1: Introduction to Cost Accounting 2016

23 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 52

Chapter 1: Introduction to Cost Accounting 2016

24 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 53

Question 54

Chapter 1: Introduction to Cost Accounting 2016

25 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 55

Chapter 1: Introduction to Cost Accounting 2016

26 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 56

Chapter 1: Introduction to Cost Accounting 2016

27 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 57

Chapter 1: Introduction to Cost Accounting 2016

28 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 58

Chapter 1: Introduction to Cost Accounting 2016

29 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 59

Chapter 1: Introduction to Cost Accounting 2016

30 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)

Question 60

Question 61