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bachelor of costing of accounting 2) Technology Sarawak Materials Ltd., a new client, has asked for your assistance regarding inventory valuation and management. The company

bachelor of costing of accounting

2) Technology Sarawak Materials Ltd., a new client, has asked for your assistance regarding inventory valuation and management. The company supplies different grades of paper and other stationery materials to government departments and educational institutions. Paper supplies are purchased in bulk from Germany and stored in a large rented warehouse in Dublin. The company has a five-year contract with one educational institution, a private college based in Sibu, to supply paper for student examinations. As the college strictly controls enrolment, the contract requires the same quantity of paper each year for its examinations. The managing director of Technology Sarawak Materials Ltd. has read an article on inventory valuation (FIFO, LIFO and Average Cost) and the importance of inventory management. In particular, the article proposed that the use of the economic order quantity (EOQ) may bring substantial benefits to an organisation.

As a financial advisor to the company, the managing director has asked for your opinion on this matter. Discuss the concept of FIFO, LIFO and Average Cost approaches to inventory valuation. Also, explain the application of EOQ and its drawbacks.

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3) Catalina Pastry asked its cost accountant to provide the information regarding its new product namely Strawberry Macaroon for the month of January. In January, it produced a total of 10,000 units of Strawberry Macaroons. The following are the total cost information for the units produced: Cost Flour Baking powder Sugar Strawberries Butter Egg Salary of pastry chefs - Full time Salary of pastry chef - Part time Royalty paid to La Poire Shop for using their recipe Salary of cashier Advertising on billboard Delivery boy tips Salary of cost accountant Rental of pastry kitchen Training provided to chefs to specifically make Strawberry Macaroon RM 6,000 2,000 1,500 3,000 1,000 500 2,500 1,500 400 800 150 100 2,500 2,000 450 Being the cost accountant, you are required to calculate the following for Strawberry Macaroon: i. ii. iii. iv. Direct material costs Direct labour costs Direct expenses costs Production overheads Prime Cost Total Product cost V. vi

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