Snappy Chef (Pty) Ltd is a manufacturer of kitchenware in South Africa, due to the energy crisis in the country one of their fast-moving products has been the stainless-steel whistling kettle used on gas stoves. The company uses the weighted average method to value their stock, management has requested that you assist them with valuing their inventory at the end of August 2023. Furthermore, management is reviewing the inventory management system to ensure they dont run short of one of their key raw material components, steel.

Date

Details

Quantity

Price (price/unit)

7

Purchases

350

120

9

Issued to production

376

12

Purchases

336

125

18

Issued to production

290

Additional information

There were 50 bags in stock at the end of July 2023, valued at R5 000

Steel is purchased in 80-kilogram bags and 7 800 bags are used each year.

The cost of placing a typical order for steel is estimated at R300, and the annual cost of carrying steel in inventory is R40 per bag per year.

The company uses the perpetual inventory method.

REQUIRED

a) Calculate the closing value of stock using the weighted average method (10)

b) Calculate the economic order quantity (3)

c) Calculate the number of orders (2)

When completing the template below ensure that numbers are written without the R symbol and without spacing for example R2 500 is filled in as 2500 .Where necessary round of the numbers to 2(two) decimal places. e.g R15,789 is filled in as 15.79

(a)

Date

Purchased

Sold

Balance

Units

Price/u

Amount

Units

Price/u

Amount

Units

Price/u

Amount

Opening

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7

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9

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12

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18

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(b)




(c)