Abraham Phiri Enterprise Limited (APEL) has been importing and selling second hand motor vehicles from the Far East since 2008. The firm specialises in Toyota model vehicles. APEL also sells spare parts. Its clientele is comprised of both corporate and individuals.

The delivery period is 90 days after placing an order. You have been asked by the chief executive officer to help in the accounting and valuation of inventory. On 31^st December, 2021 inventory was 35 cars at an average purchase price of K40,000 per car. The CEO would like to know APELs performance for the year ending 31^st December, 2022. The following information was made available:

Purchases:

Date	Quantity (Units)	Price (K/unit)
February 12	30	51,400
March 25	50	52,800
April 14	40	53,100
May 05	25	54,000
August 16	20	55,250
September 29	35	57,300
October 08	15	58,350

Sales:

Date	Quantity (Units)	Price (K/unit)
February 2	25	61,500
February 15	25	61,750
March 30	50	62,200
April 15	50	62,455
May18	18	62,455
May 30	10	62,850
August 27	17	70,000
October 10	28	72,700

Required:

1. Prepare the inventory valuation sheet for the year ending 31 December, 2022 using the following:

1. First in Last in (FIFO)
2. Last in first out (LIFO)
3. Weighted Average (AVCO)

2. Prepare the profit statement using all the three methods above in (a).
3. APEL is reviewing its inventory control policy with regards to motor vehicles. You are told that the cost of making one order is K100, the cost of holding one unit for one year is K250 and the annual demand for motor vehicles is 300. There is neither lead time nor buffer inventory.

1. Calculate the Economic order quantity (EOQ).
2. Calculate the annual holding costs and annual ordering costs using the EOQ.

(Show the formula in each part)

The following transactions were recorded for the years 2016 to 2020:

Year	Spare parts (units)	Total cost (K)
2016	1,000	120,000
2017	1,600	240,000
2018	2,200	473,000
2019	2,000	480,000
2020	2,500	520,000

Required:

4. Calculate the total cost in the year 2021 assuming that APEL had 2,175 units.

(4 marks)

5. Describe (Four) different cost behaviours.

(4 marks)

APELs costing department is in the process of determining salaries and wages for December 2022. The following information is available for four workers:

Activity	Kalombo	Sitali	Chigangu	Muleya
Actual units produced	350 units	600 Units	500 Units	450
Actual hours worked	60 Hours	45 Hours	48 Hours	55 hours
Wage rate per hour	K10	K12	K15	K11.5
Expected work hours	50 Hours	50 Hours	50 Hours	50
Over time paid @	Time and half	Time and half	Time and half	Time and half

The standard time per unit for each worker is 12 minutes and the bonus is paid at 60% of time saved.

Required:

6. Calculate the total pay for each of the employees clearly showing the bonus pay, overtime premium and basic wage figures.
7. Explain the advantages and disadvantages of group bonus schemes.