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Chapter 1: Introduction to Cost Accounting 2016
1 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Financial Management
Bachelors of Business (Specialized in
Finance) –Tutorial Questions
Chapter 2: Accounting for Materials
Chapter 1: Introduction to Cost Accounting 2016
2 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Practice Questions
Question 1
Question 2
Question 3
Question 4
Chapter 1: Introduction to Cost Accounting 2016
3 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 5
Question 6
Question 7
Question 8
Chapter 1: Introduction to Cost Accounting 2016
4 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 9
Question 10
Question 11
Question 12
Chapter 1: Introduction to Cost Accounting 2016
5 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 13
A wholesaler has 8,450 units outstanding for part X 100 on existing customers’ orders; there are
3,925 units in inventory and the calculated free inventory is 5,525 units.
How many units does the wholesaler have an order with his supplier?
Question 14
A large retailer with multiple outlets maintains a central warehouse from which the outlets are
supplied. The following information is available for Part Number SF525.
Average usage 350 per day
Minimum usage 180 per day
Maximum usage 420 per day
Lead time for replenishment 11-15 days
Re – order quantity 6,500 units
Re – order level 6,300 units
a. Based on the data above, what is the maximum level of inventory?
b. Based on the data above, what is the approximate number of Part Number SF525 carried
as buffer inventory?
Question 15
A company is able to manufacture its own components for inventory at the rate of 4,000 units a
week. Demand for the component is at the rate of 2,000 units a week. Set up costs for each
production run are $50. The cost of holding one unit of inventory is $0.001 a week.
Required
Calculate the economic production run.
Chapter 1: Introduction to Cost Accounting 2016
6 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 16
A company uses an item of inventory as follows:
Purchase price $96 per unit
Annual demand 4,000 units
Ordering cost $300
Annual holding cost 10% of purchase price
Economic order quantity 500 units
Required
Ascertain whether the company should order 1,000 units at a time in order to secure an 8%
discount.
Question 17
A domestic appliance retailer with multiple outlets sells a popular toaster known as the Autocrisp
2000, for which the following information is available.
Average sales 85 per day
Maximum sales 105 per days
Minimum sales 60 per day
Lead time 14 – 20 days
Reorder quantity 1,850
Required
a. Based on the above data, at what level of inventory would a replenishment order be
issued?
b. Based on the above data, what is the maximum inventory level?
Chapter 1: Introduction to Cost Accounting 2016
7 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 18
The demand for a product is 13,550 units for a three month period. Each unit of product has a
purchase price of $18 and ordering cost are $23 per order placed.
The annual holding cost of one unit of product is 10% of its purchase price.
What is the EOQ (to the nearest unit)?
Question 19
ABC Co gradually receives its re-supply of inventory at a rate of 10,000 units a week. Other
information is available as follows.
Weekly demand 6,000 units
Set-up costs for each production run $165
Weekly cost of holding one unit $0.0075
What is the economic production run?
Question 20
Chapter 1: Introduction to Cost Accounting 2016
8 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 21
Question 22
Chapter 1: Introduction to Cost Accounting 2016
9 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 23
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Chapter 1: Introduction to Cost Accounting 2016
10 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
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Chapter 1: Introduction to Cost Accounting 2016
11 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
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Chapter 1: Introduction to Cost Accounting 2016
12 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
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Chapter 1: Introduction to Cost Accounting 2016
13 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 35
Chapter 1: Introduction to Cost Accounting 2016
14 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 36
Chapter 1: Introduction to Cost Accounting 2016
15 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 37
Chapter 1: Introduction to Cost Accounting 2016
16 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
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Chapter 1: Introduction to Cost Accounting 2016
17 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
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Chapter 1: Introduction to Cost Accounting 2016
18 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 43
Chapter 1: Introduction to Cost Accounting 2016
19 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
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Chapter 1: Introduction to Cost Accounting 2016
20 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
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Chapter 1: Introduction to Cost Accounting 2016
21 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
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Chapter 1: Introduction to Cost Accounting 2016
22 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
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Chapter 1: Introduction to Cost Accounting 2016
23 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
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Chapter 1: Introduction to Cost Accounting 2016
24 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
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Chapter 1: Introduction to Cost Accounting 2016
25 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 55
Chapter 1: Introduction to Cost Accounting 2016
26 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 56
Chapter 1: Introduction to Cost Accounting 2016
27 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 57
Chapter 1: Introduction to Cost Accounting 2016
28 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
Question 58
Chapter 1: Introduction to Cost Accounting 2016
29 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
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Chapter 1: Introduction to Cost Accounting 2016
30 Ibrahim Sameer Bachelors of Business – Finance (CMA – Cyryx College)
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