TOPIC 2 COSTING

What is the definition of materials ?

• Beginning inventory

• Ending inventory

• Supplies purchase from outside which used to produce product for sale.

• Work in progress

The following are the aspects we control for materials, EXCEPT ?

• control over delivery period

• control over usage

• control over storage

• control over purchase

Journal entries for returns of materials purchased ( DR Creditors control, CR material control)

• True

• False

The advantage of centralised storage is :

• cheaper store maintenance

• Common misconception.

• good care of managing documentation

• effective security arrangement and good care of stores.

The formula to calculate reorder level

• Q/2 X PCS

• maximum usage X maximum re-order period

• total cost

• minumum level + (EOQ/2)

Which of the following is FALSE in the PURCHASING PROCEDURE

• Purchasing department will request for the purchase of raw materials.

• Materials delivered will be received by account department.

• The materials received will be checked by storekeeper with the received note.

• Invoice will be signed and sent to account department.