(a) Explain the meaning of:

(i) continuous stocktaking, and

(ii) perpetual inventory CIMA, Stage 2, November 1995 in the context of a material control system.

(5 marks)

(b) A company operates an historic batch costing system, which is not integrated with the financial accounts. and uses the weighted average method of pricing raw material issues. A weighted average price (to 3 decimal places of a pound £) is calculated after each purchase of material.

Receipts and issues of Material X for a week were as follows:
Day 1 4 Receipts into stock Kgs 1.400 1.630 £
1.092.00 1.268.14 Issues to production Day Kgs 2 1.700 5 1.250 At the beginning of the week. stock of Material X was 3.040 kgs at a cost of £0.765 per kg. Of the issues of material on Day 2. 60 kgs were returned to stock on Day 3. Of the receipts of material on Day 1. 220 kgs were returned to the supplier on Day 4. Invoices for the material receipts during the week remained unpaid at the end of the week.
Required:
(i) Prepare a tabulation of the movement of stock during the week.
showing the changes in the level of stock. its valuation per kilogram.
and the total value of stock held.
(ii) Record the week's transactions in the Material X stock account in the Cost Ledger. indicating clearly in each case the account in which the corresponding entry should be posted.AppendixLO1