ACCA F2(Accounting For Materials) By N.Naidoosowmy

10 Questions | Total Attempts: 122

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Questions and Answers
  • 1. 
    1. which of the following fucntions are fullfilled by a goods received note(GRN)?
    provides information to: (i)   update the inventory records on receipt of goods (ii)  check the price on the supplier's invoice (iii) check the quantity on the supplier's invoice (iv)  update the inventory records every financial year
    • A. 

      (i) (ii) and (iii)

    • B. 

      (I) and (iv) only

    • C. 

      (i) and (iii) only

    • D. 

      None of the above

  • 2. 
    What is the economic batch quantity used to establish? optimal
    • A. 

      Reorder quantity

    • B. 

      Reorder level

    • C. 

      Inventory level for production

    • D. 

      Order quantity

    • E. 

      Maximum usage

  • 3. 
    The annual demand for an item of inventory is 3550 units. The cost of placing an order is$190 and the cost of holding an item in stock for one year is$45. What is the economic order quantity, to the nearest unit?
    • A. 

      3550 units

    • B. 

      173 units

    • C. 

      170 units

    • D. 

      35 units

  • 4. 
    For component NN789, the re-order quantity is 12,900 units and the average inventory holding is 7,700 units. What is the level of safety inventory?
    • A. 

      1,000

    • B. 

      1,250

    • C. 

      1,450

    • D. 

      12,570

  • 5. 
    Data relating to item SG8 are as follows: average daily usage                                             930 units minimum daily usage                                          780 units maximum daily usage                                         1080 units lead time for replenishment of inventory          16 to 21 re-order quantity                                                    10,550 units What is the re-order level which avoids stockouts(running out of inventory)
    • A. 

      10, 550 units

    • B. 

      12, 480 units

    • C. 

      17, 205 units

    • D. 

      22, 680 units

  • 6. 
    A company determines its order for a component using EOQ. What would be the effects on the EOQ and the total annual ordering cost of an increase in the annual cost of holding one unit of the component in inventory? 
    • A. 

      EOQ: Lower, Total Annual Ordering Cost: Higher

    • B. 

      EOQ: Higher, Total Annual Ordering Cost: Lower

    • C. 

      EOQ: Lower, Total Annual Ordering Cost: No Effect

    • D. 

      EOQ: Higher, Total Annual Ordering Cost: No Effect

  • 7. 
    As we know Physical inventory is a process where a business physically counts its entire inventory. How Physical inventory is calculated?
    • A. 

      O.5(ROQ) + buffer inventory

    • B. 

      Quantity on order - Free inventory balance - Quantity in allowcation

    • C. 

      Free inventory balance - Quantity on allowcation + Quantity on order

    • D. 

      Free inventory balance + Quantity on allowcation - Quantity on order

  • 8. 
    Which of the following is correct with regard to Holding Inventory (i)   If customer demand are met, customer will be happy (ii)  If customer are happy, sales and, therefore, profits will increase (iii) Holding raw material inventory will prevent hold-ups in the production process of manufacturing companies
    • A. 

      (i) and (ii) only

    • B. 

      (i) (ii) and (iii)

    • C. 

      (iii) only

    • D. 

      All of the above

  • 9. 
    What is the correct entry of : Issue materials to production?
    • A. 

      DR Production Overheads Control Account and CR Material Inventory Control Account

    • B. 

      DR Material Inventory Control Account and CR Work in progress Account

    • C. 

      DR Work in progress Account and CR Material Inventory Control Account

    • D. 

      DR Profit and Loss Account and CR Material Inventory Control Account

  • 10. 
    Which of the following is correct with regard to Economic Batch Quantity.
    • A. 

      It determine the number of items that should be produced in a batch

    • B. 

      It determine the number of items that should be delivered to

    • C. 

      It is the re-order quantity which minimises the total costs associated with holding and ordering stock

    • D. 

      It indicates when inventory held reaches thr re-order level then a replenishment order should be placed