ma 2

Question 1

Methods of valuing closing inventory

Answer 1

1. FIFO(First in, First Out)
2. LIFO(Last in, First Out)
3. Weighted Avg

Question 2

FIFO

Answer 2

Materials issued out of inventory in the same order in which they were delivered into inventory.

Question 3

LIFO

Answer 3

Materials are issued out of inventory in the reverse order to which they were delivered into inventory

Question 4

Weighted AVG

Answer 4

Calculates the avg cost after each issue of materials

Question 5

Costs involved in inventory ordering systems:

Answer 5

1. Purchase cost
2. Reorder cost
3. Inventory holding cost

Question 6

Purchase cost

Answer 6

Cost of actually purchasing goods

Question 7

Reorder cost

Answer 7

Cost of placing orders includes admin time for placing order, and delivery cost

Question 8

Inventory holding cost

Answer 8

Cost of holding items in inventory such as warehouse space and insurance