COVID-19 Ltd produces a specialized product; LOCKDOWN which has a constant monthly demand of 4000 units. The LOCKDOWN requires a component which COVID-19 Ltd purchases from a supplier at GHS10 per unit. The component requires a three-day lead time from the date of order to the date of delivery. The ordering cost is GHS0.60 per order and the holiday cost is 10% per annum. Required: a. Calculate i) The economic order quantity. (1.5 marks) (ii) The number of orders required per year. (1 mark) (iii) The total cost of ordering and holding the components for the year. (1 mark) b. Assuming that there is no safety stock and that the present stock level is 400 components, when should the next order be placed? (Assume a 360-day year.) (1 mark) (Total = 4.5 marks) Question 2 AL-FAIDA Ltd is a retail company operating within the TIJANIYA enclave. AL-FAIDA has been reviewing the adequacy of its stock control systems. During a period of such review, three products were identified for further investigations. The table below sets out the details relevant to the three products. Product Type Units in stare Price per il Min. weekly Normal weekly Mex. weekly 1000 sales in GHS sales in GHS sales in GHS (GHS) 000 2.25 Khaolack 500 0.36 Samgoon 250 Gross margin is expressed as a % of sales and given as follows for each product: Fez = 42, Khaolack = 46; Samgoon = 37. Gross margin = sales - purchase price of product. Outstanding order: Samgoon - order for 250,000 units placed 2 trading days ago. There are 6 trading days per week. All orders are delivered by suppliers into the central warehouse. The lead time is one week from the time order is placed. A further week is required by the retailer in order to transfer stock from central warehouse to stores. Both of these lead times can be relied upon. Required: Calculate for each product: i. the minimum and maximum weekly sales units (3 marks) ii. the stock re-order level (3 marks) iii. the maximum stock control level (3 marks) Show all workings Marks allotted for workings in store Fex 25 26 0.87 60 96 You have just been appointed the cost accountant of AMINIYA MANUFACTURING LTD. The management of the company, prior to your appointment have always resorted to the work of consultants in costing and pricing products. At your interview, you had indicated to management the importance of cost and the various classifications of costs. The interview panel, very enthused with your explanations decided to engage your services as an employee- thus, your appointment as a cost accountant. Required: Write a memo to management detailing the various classifications of costs and provide two reasons for which it is important to classify cost
