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WorksheetsAccounting for Materials Quiz
Total questions: 20
Worksheet time: 28mins
What is the formula used to calculate raw materials order quantity?
(a) + (b) - (c)
In which inventory valuation method is the remaining stock valued at older prices ?
FIFO (First-In, First-Out)
LIFO (Last-In, First-Out)
Cumulative Weighted Average (CWA)
Periodic Weighted Average (PWA)
A company named NovaGear Industries manufactures a device called the Klyro. Each Klyro requires 3.8 kg of a raw material called Tarnex. At the start of July, NovaGear has 950 kg of Tarnex in stock. Additionally, there are 100 units of finished Klyros in inventory, which will be used to meet part of the production demand.
The expected sales for the next three months is:
Month: July: 1,100 Klyros / August: 1,400 Klyros / September: 1,250 Klyros
To prepare for October’s production schedule, the company wants to have enough Tarnex in stock at the end of September to produce 150 Klyros.
If NovaGear places a single order for Tarnex at the beginning of July to meet all production requirements through September and to build up the required closing inventory, how many kilograms of Tarnex should it order?
14440
14820
13490
14250
What is the main characteristic of the Cumulative Weighted Average (CWA) method?
Uses oldest inventory costs first
Averages are calculated at the end of the period
A running average is maintained after each purchase
Values inventory at most recent purchase prices
Product X7 requires 0.5 kilograms of raw material R2 per unit. The production plan for period 9 is to manufacture 8,000 units of product X7. The inventory levels of raw material R2 are expected to increase by 300 kg during period 9. What is the budgeted usage of raw material R2 for producing product X7 in period 9?
4300 kgs
3700 kgs
4000 kgs
16000 kgs
During periods of inflation (rising prices), the FIFO method results in (a) cost of goods sold (COGS) because it assigns the (b) inventory costs to sales. This leads to (c) reported profits and a (d) value of closing inventory, as the remaining inventory reflects the more (e) purchase costs.
What is the impact of using the LIFO method on the cost of goods sold (COGS) in a rising price environment?
Based on older, usually cheaper prices
Based on newer, often higher prices
No impact on COGS
Based on average prices
In the LIFO method, which inventory is sold first?
Oldest inventory
Newest inventory
Average inventory
Random inventory
A company experiences rising prices for its raw materials throughout the year. It uses one of the following inventory valuation methods: FIFO (First-In, First-Out), LIFO (Last-In, First-Out), CWA (Cumulative Weighted Average), and PWA (Periodic Weighted Average).
Based on this scenario, arrange the methods in order from the one that would result in the lowest closing inventory value to the one that would result in the highest closing inventory value.
LIFO
CWA
PWA
FIFO
Using the provided data, calculate the Cost of Goods Sold (COGS) for the month of May under the FIFO method.
8120
15480
16220
13380
What is the key difference between Cumulative Weighted Average (CWA) and Periodic Weighted Average (PWA)?
CWA updates at the end of the period, PWA updates with each purchase
CWA updates with each purchase, PWA updates at the end of the period
CWA is used for decreasing prices, PWA for increasing prices
CWA is more accurate than PWA
Calculate the closing inventory value using the LIFO method
16180
7420
8120
15480
Which inventory method is not allowed under IFRS due to its impact on minimizing profits during inflation?
FIFO
LIFO
CWA
PWA
Which inventory method is described as providing a balance between extremes and is good for stability and simplicity?
FIFO
LIFO
CWA/PWA
None of the above
What is a potential issue with using the Weighted Average method in terms of pricing?
It may have many decimal points, confusing managers.
It undervalues issues compared to recent purchases.
It is harder to track and manage as older batches remain unused.
It is not allowed under IFRS.
If the sale price of flour is Rs.60/kg, what is the total profit in May using the periodic weighted average method to the nearest Rs.?
6324
Lisa’s Gourmet Pastries provided the following information regarding its inventory transactions during June. On June 1, the opening stock was 120 kg of flour valued at $48 per kg. On June 4, the company purchased another 180 kg at $50 per kg. A sale of 200 kg was made on June 10. Later, on June 16, a purchase of 100 kg was made at $52 per kg. Another sale of 80 kg took place on June 20. The company recorded the cost of goods sold (COGS) as $9,760 for the June 10 sale and $4,000 for the June 20 sale.
Required:
Based on the data provided and the recorded COGS figures, identify the inventory valuation method that Lisa’s Gourmet Pastries has likely used.
LIFO
FIFO
CWA
PWA
A company manufactures a specialty chemical that requires a specific raw material. Each batch of the chemical requires 3 kilograms of this raw material. The company plans to produce 4,500 batches during the year. At the beginning of the year, it has 2,100 kg of raw material in stock. However, by the end of the year, it intends to lower its raw material inventory by 25%.
What quantity of raw material should be purchased for the year?
11925 kg
15075 kg
13500 kg
A company experiences falling raw material prices throughout the year. It uses one of the following inventory valuation methods: FIFO (First-In, First-Out), LIFO (Last-In, First-Out), CWA (Cumulative Weighted Average), and PWA (Periodic Weighted Average).
Based on this scenario, arrange the methods in order from the one that would result in the highest cost of goods sold (COGS) to the one that would result in the lowest COGS.
FIFO
PWA
CWA
LIFO
Organize the following statements about the FIFO (First-In, First-Out) inventory valuation method into two categories: Advantages and Disadvantages.
It is logical and reflects how we would expect materials to be issued.
The closing inventory value is likely to reflect the current cost of the items in inventory
It satisfies financial reporting criteria for the valuation of inventory
It requires each receipt of inventory to be recorded separately.
Under rising prices, issues are undervalued vs. recent purchases
Managers will likely be charged different prices for the same materials as the period progresses
