AAT Level 2 PCTN - Chapters 3 & 4 Review Quiz

What are the three main types of inventory?

• Raw materials, work in progress, and finished goods.

• Direct materials, indirect materials, and finished goods.

• Raw materials, direct materials, and indirect materials.

• Work in progress, direct materials, and indirect materials.

Which inventory valuation method assumes that the issues into production will be made from the oldest inventory available?

• LIFO

• AVCO

• FIFO

Which inventory valuation method is not acceptable by HMRC or the International Accounting Standard 2 for Inventories?

• AVCO

• LIFO

• FIFO

What is the formula for calculating the average price per unit in the AVCO method?

• Total units in inventory / Total value of inventory.

• Total value of inventory x Total units in inventory.

• Total value of inventory / Total units in inventory.

What are the five main sections in a manufacturing account?

• Raw materials, work in progress, finished goods, direct costs, and indirect costs.

• Direct materials used, direct cost, manufacturing cost, cost of goods manufactured, and cost of goods sold.

• Opening inventory, purchases, closing inventory, direct costs, and indirect costs.

• Sales, cost of goods sold, gross profit, direct costs, and indirect costs.

What is the primary aim of inventory control?

• To increase holding costs.

• To minimise the chances of stock-outs while keeping the costs of holding inventory down.

• To maximise stock-outs and increase holding costs.

• To ensure the lowest quality inventory is available.

State whether the following statement is true or false:
A smaller reorder quantity is likely to result in the need for less frequent orders being placed.

• True

• False

Jones Ltd. has the following inventory movements for July:
July 1: Opening inventory - 100 units at £10 each.
July 15: Purchased 200 units at £12 each.
July 20: Issued 150 units.

Using the FIFO method, what is the cost of the 150 units issued?

• £1,500

• b. £1,600

• £1,700

• £1,800

Jones Ltd. has the following inventory movements for July:

July 1: Opening inventory - 100 units at £10 each.

July 15: Purchased 200 units at £12 each.

July 20: Issued 150 units.

If Jones Ltd. uses the AVCO method, what is the cost of the 150 units issued?

• £1,600

• £1,700

• £1,750

• £1,800

What are the two main methods of calculating employees’ pay?

• Time related pay and output related pay.

• Direct labour and indirect labour.

• Salaried and hourly-rate.

• Overtime and piecework.