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The provided text contains answers to multiple-choice questions related to cost accounting and inventory management, including a calculation for closing stock using the FIFO method. What are the origi

Accounting

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Step-by-step solution

5 steps

Here are the answers to questions 6 through 14:

Part 6

The amount used up to provide a service is the cost.
The correct option is A.

Part 7

A variable cost changes directly with the volume of production.
The correct option is C.

Part 8

Direct wages are a component of prime cost, which includes direct materials and direct labor.
The correct option is B.

Part 9

The process of keeping stores at their optimal level to balance supply and demand while minimizing costs is called inventory control.
The correct option is D.

Part 10

A goods received note (GRN) is used to check the goods sent by the supplier against the purchase order.
The correct option is B.

Part 11

The economic order quantity (EOQ) is the most cost-effective quantity of goods to order at a time, as it minimizes total inventory costs.
The correct option is D.

Part 12

A stock verification sheet is the document used to record the results of continuous stocktaking.
The correct option is B.

Part 13· 3 steps

Calculate the closing stock using the FIFO method of pricing issues.

  1. Determine the available stock before issues.

    • July 1: 200 units @ D 2.50 = D 500
    • July 5: 400 units @ D 3.00 = D 1,200 Total units available = 200+400=600200 + 400 = 600 units.

  2. Apply the FIFO (First-In, First-Out) method for issues.

    On July 10, 400 units are issued. Under FIFO, the first units purchased are the first ones issued.

    • Issue 200 units from July 1 stock @ D 2.50.
    • Remaining units to issue = 400−200=200400 - 200 = 200 units.
    • Issue 200 units from July 5 receipt @ D 3.00.

  3. Calculate the remaining closing stock.

    The remaining stock consists of the units from the July 5 receipt that were not issued.

    • Units remaining from July 5 receipt = 400−200=200400 - 200 = 200 units.
    • Value of closing stock = 200 units×D3.00/unit=D600200 \text{ units} \times D 3.00/\text{unit} = D 600.

    The correct option is B.

    D 600\boxed{\text{D 600}}

Part 14· 2 steps

What is the cost of issues using FIFO method of pricing issues?

  1. Identify the units issued under FIFO.

    As determined in Question 13, 400 units were issued:

    • 200 units from July 1 stock @ D 2.50
    • 200 units from July 5 receipt @ D 3.00

  2. Calculate the total cost of these issued units.

    • Cost of 200 units from July 1 = 200×D2.50=D500200 \times D 2.50 = D 500
    • Cost of 200 units from July 5 = 200×D3.00=D600200 \times D 3.00 = D 600
    • Total cost of issues = D500+D600=D1,100D 500 + D 600 = D 1,100.

    The correct option is C.

    D 1,100\boxed{\text{D 1,100}}
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