The trainee financial manager of Govan Limited took over the duties of the financial manager who was on leave. He requires assistance with the following matters for which he has limited knowledge:

- Determining the number of orders to place each year for the components required in production

- Determine the value of issues to production and value of closing inventory using two different methods of inventory valuation.

- Preparing a Pro Forma Statement of Financial position

Question

1.1 Use the information given below to calculate the number of orders that should be placed during 2021 using the most advantageous quantity to order each time (5)

1.2 Govan Limited expects to purchase 40 000 components during 2021 with a purchase price of r20 per unit, an ordering cost of R2 per order and a carrying cost of 20 percent of the unit purchased price

Use the information given below to calculate the value of closing inventory and cost of sales using the

1.2.1 First in First out method (5)

1.2.2 Weighted Average cost method. Round off the weighted average cost per unit to the nearest cent (5)