Answer to Question #308010 in Management for lydia

Question

Quarter 2020 Units purchased Cost per unit Total purchases N$ Unit sold

1 300 30 9000 300

2 400 35 14000 300

3 400 36 14400 300

4 300 37 11100 300

1400 48500 1200

Inventory at the beginning of 1st quarter was 500 units at N$29per unit and Inventory at end of 4th quarter was 700 units. Based on inventory reports for the last 5years the delivery period for gaskets has been between 1 and 2 weeks and on average 200 to 300 gaskets per quarter. 2.1 Using the FIFO method calculate the cost of goods sold

2.2Using the LIFO method calculate the cost of goods sold

2.3 What is the gross profit for the year based on FIFO cost of sales figure given a margin of 20%?

2.4 Re order level

2.5Minimum inventory level

2.6Name any three documents involved in inventory control

Answer 1

2.1 Cost of goods sold = Cost of the oldest inventory* amount of inventory sold

(29*700)*200 = N$4060000.

2.2 Cost of goods sold = Cost of the oldest inventory* amount of inventory sold

(29*700)*200 = N$4060000.

2.3 Profit of the year = (20*4060000)/100 = N$812000

2.4 Re order level 700 units

2.5 The minimum inventory level is 200 units.

2.6 The documents involved in inventory control include; Stock Requisition, Pick and Issue, Issue Confirmation, and Inventory Adjustment among others.