Maju Bhd is a trading company and has two types of inventories, namely Model Q1 and Model A2. Maju Bhd just hired Mr. Radhi as an assistant to the inventory controller. As a start, Mr. Radhi reviewed an incomplete schedule of inventories on hand as of 31 December 2022, and the cost of sales for the month of December 2022 to understand how costs are calculated for Model Q1. Maju Bhd applies a perpetual inventory system and records the purchase and account payment using the net method. The reporting period for Maju Bhd is 31 December.

The incomplete schedule of inventory on hand and cost of sales of unit inventory Model Q1 is as follows:

		Purchase			Cost of Sales			Ending Balance
Date	Detail	Unit	Unit cost	Total cost (RM)	Unit	Unit cost	Total cost (RM)	Unit	Unit cost	Total cost (RM)
1-Dec	Beginning inventories							50	300	15,000
3-Dec	Purchase	40	350	14,000				50	300	15,000
	Transportation cost			400				40	360	14,400
				14,400				90		29,400
	Cost per unit			360
10-Dec	Sold				50	300	15,000	35	360	12,600
					5	360	1,800
					55		16,800

The information for inventory transactions that took place on 12 December 2022 and onwards is as follows:

Date	Detail
12 Dec	Returned 5 units of Model Q1 to the supplier. These units were recently purchased on 3 December 2022.
16 Dec	Sold 20 units of Model Q1 for RM750 each.
21 Dec	Purchased 3 units of Model A2 for RM6,500 each. Additional costs incurred include RM700 cost on freight.
22 Dec	5 defect units of Model Q1 were returned by a customer. These units were identified as released for sale from the beginning inventory.
24 Dec	Sold 5 units of Model A2 at RM8,500 each.
26 Dec	Purchased 15 units of Model Q1 for RM400 each. The purchase was on credit with 2/10, n/60 term.

REQUIRED:

1. Assume that you are in the position of Mr Radhi, based on the review of the incomplete schedule, determine: 

(i)    The cost flow assumption applied by Maju Bhd to measure the cost of inventory. Give ONE (1) justification for your answer. 

(ii)    The freight term applied to determine ownership of inventory for the purchase on 3 December 2022. Give ONE (1) justification for your answer. 

1. By referring to the incomplete schedule, continue with the transaction on 12 December 2022 and onwards to calculate the cost of inventory on hand at 31 December 2022 and the cost of sales for the month of December 2022 for the item Model Q1. (round your answer to the nearest RM).

1. Model A2 is small in its quantity and easily distinguishable. 
2. Suggest the appropriate cost flow assumption that can be used by Maju Bhd for this inventory. 

1. Give TWO (2) examples of products that are suitable with the suggested cost flow assumption in (c)(i).