Zoulman Bhd is a commercial company that trades in wooden products. The main products are wooden tables, windows and cupboards. Since its incorporation, the demand for the company products is high so the company expects better sales growth in the future. However, in this year 2019, the company experienced a pressure on selling prices due to the cheaper selling prices that offer by other competitors for similar products. Zoulman Bhd has three types of inventories. There are wooden door, Wooden Windows and Wooden Cupboards. The current inventory system used by Zoulman Bhd is the periodic system and the inventory cost flow assumption is weighted average method. This method was chosen as it is practical and easy to apply. However, due to the current situation, Mr Nizamm, the companys accountant, sees the importance of having a detailed flow of inventory cost to identify which of the companys product(s) contributes the largest margin to the companys profit. Based on the detailed report, the total amount of inventories in Zoulman Bhd was RM1,020,860 on 1st December 2019 and the company closes its account on 31 December each year. In the following table, the company summarised the relevant inventory costs and beginning unit at 1 December 2019:

Wooden Tables

Model	Unit	Cost per unit	Total Cost
B1	25	2800	70000
B2	20	1750	35000
A1	15	4500	67500
A2	30	3250	97500
	90		270000

Wooden Windows

Unit	Cost per unit	Total Cost
220	480	105600
175	560	98000
330	900	2970000
-	-	-
725		500600

Wooden cupboards

Unit	Cost per unit	Total Cost
609	150	91350
315	158	49770
460	159	73140
225	160	36000
1609		250260

Note: Code number (Model A1, A2, B1 and B2) is only applied to Wooden Tables inventory. Mr Nizaam with his team conducted a study to characterize each type of inventory, they found that the business entity purchases their inventories at different prices due to the market prices fluctuation and purchasing from different suppliers. Thus, implementing periodic inventory system and weighted average method are no longer appropriate for the current unease situation as the inventory value may not reflect the current price within the period of price instability. Mr Nizaam has assigned Ms Alyia , a senior account assistant, in order to calculate the value of ending inventory that should appear on Zoulman s statement of financial position. in addition, based on the findings of the study of Mr Nizaams team, perpetual inventory system is to be applied and different cost flow assumption has been assigned for each type of inventory. The details are given below:

Wooden Tables:

Characteristic: Easily traceable item as it is based on the customer order. The cost of each product is varying depends on its size, colour and shape

Wooden Windows

Characteristic: This item is homogenous; however, Zoulman Bhd acquires this item from a few suppliers. Thus, the cost is erratic.

Wooden cupboards

Characteristic: This item is homogenous and Zoulman Bhd acquires this item from a single supplier.

The followings are the transactions that relate to the purchases and sales of inventories for Zoulman Bhd for the month of December 2019. Net method and freight term are applied based on the individual transaction.

2-Dec Purchase of Wooden Windows from supplier Samass Bhd at the cost of RM47,250 (105 units) with a term 2/10, n/45, FOB destination.

3-Dec Purchase of Wooden Cupboards from Intan Kayu Bhd at the cost of RM50,382 (311 units). Freight term is FOB shipping point. Freight charge incurred RM250.

4-Dec Sold 500 units Wooden Cupboards for the price of RM550 on credit to Gumback Bhd.

5-Dec Gumback Bhd returned 25-unit items from the recent purchase.

10-Dec Sold 15 units of Wooden Tables Model A1 for RM6,000 each.

11-Dec Returned two units of Wooden Windows to the supplier. These units were recently purchased on 2 December 2019.

20-Dec Sold three units of Model A2 for RM5,000 each. Additional costs incurred include RM830 cost on freight FOB destination.

21-Dec Sold 500 units of Wooden Windows for RM850 each.

22-Dec Two defect units of Wooden Windows were returned by a customer.

25-Dec Purchased 11 units of Model B1 from the same suppliers at the same cost.

Mr Nizaam and his team has suggested the new inventory system (mentioned in the case) and the following cost flow assumption for different types of inventories:

Wooden tables	Specific Identification Method
Wooden Windows	FIFO
Wooden Cupboards	- Moving Average Method

Based on the new inventory system and cost flow assumption, A schedule to compute the cost of purchase, cost of sales and the value of ending inventory for each type of inventories for the month of December, 2019. is as following

Required:

For each type of inventories, calculate their respective gross profit for December 2019 sales. Which type of inventory shows the highest gross margin? And If the company has to cease down the operation of one of its inventories due to the stiff competition and cost competitiveness, suggest to Mr Nizaam which type of inventory is potentially to be withdrawn. Justify your answer.

Inventory Report - Wooden Tables Purchased Cost of Goods Sold Date Model Cost per Total Cost per Ending Inventory Cost per Total Unit unit Cost Unit Total Cost Unit unit Cost unit Dec-01 B1 25 B2 20 2,800 1,750 4,500 3,250 70,000 35,000 67,500 97,500 A1 15 A2 30 Dec-10 A1 15 4,500 67,500 B1 25 B2 20 2,800 1,750 3,250 70,000 35,000 97,500 A2 30 Dec-20 A2 3 3,250 9,750 B1 25 B2 20 A2 27 Dec-25 B1 11 2,800 30,800 36 2,800 70,000 1,750 35,000 3,250 87,750 2,800 1,00,800 1,750 35,000 3,250 87,750 2,23,550 B2 20 27 A2 Dec-31 30,800 77,250 Inventory Report - Wooden Windows Purchased Cost of Goods Sold Date Transac Total Cost per unit Unit Ending Inventory Cost per Total Unit unit Cost Cost per unit Unit Total Cost Cost Dec-01 Balance 2201 175 330 Dec-02 Purchase 105 450 47,250 220 175 330 480 1,05,600 560 98,000 900 2,97,000 480 1,05,600 560 98,000 900 2,97,000 450 47,250 480 1,05,600 560 98,000 900 2,97,000 450 46,350 105 -2 450 -900 220 Dec-11 Purchase Return 175 330 103 Dec-21 Sales 220 175 105 480 1,05,600 560 98,000 900 94,500 900 -1,800 225 103 227 Dec-22 Sales -2 900 2,02,500 450 46,350 900 2,04,300 450 46,350 2,50,650 Return 103 Dec-31 Balance 46,350 2,96,300 Date Transac Inventory Report - Wooden Cupboards Purchased Cost of Goods Sold Cost per Total Cost per Total Unit unit Cost unit Cost Unit Dec-01 Balance Ending Inventory Cost per Total Unit unit Cost 609 150 91,3501 315 158) 49,770 460 159 73,140 225 160 36,000 609 150 91,350 158 49,770 460 159 73, 140 225 160 36,000 311 162 50,382 1,420 156.58 2,22,344 Dec-03 Purchase 311 162 50,382 315 Dec-04 Sales 500 156.58 78,290 -25 156.58 -3,914 Dec-05 Sales Return Dec-31 Balance 1,445 156.58 2,26,258 2,26,258 50,382 74,376 Inventory Report - Wooden Tables Purchased Cost of Goods Sold Date Model Cost per Total Cost per Ending Inventory Cost per Total Unit unit Cost Unit Total Cost Unit unit Cost unit Dec-01 B1 25 B2 20 2,800 1,750 4,500 3,250 70,000 35,000 67,500 97,500 A1 15 A2 30 Dec-10 A1 15 4,500 67,500 B1 25 B2 20 2,800 1,750 3,250 70,000 35,000 97,500 A2 30 Dec-20 A2 3 3,250 9,750 B1 25 B2 20 A2 27 Dec-25 B1 11 2,800 30,800 36 2,800 70,000 1,750 35,000 3,250 87,750 2,800 1,00,800 1,750 35,000 3,250 87,750 2,23,550 B2 20 27 A2 Dec-31 30,800 77,250 Inventory Report - Wooden Windows Purchased Cost of Goods Sold Date Transac Total Cost per unit Unit Ending Inventory Cost per Total Unit unit Cost Cost per unit Unit Total Cost Cost Dec-01 Balance 2201 175 330 Dec-02 Purchase 105 450 47,250 220 175 330 480 1,05,600 560 98,000 900 2,97,000 480 1,05,600 560 98,000 900 2,97,000 450 47,250 480 1,05,600 560 98,000 900 2,97,000 450 46,350 105 -2 450 -900 220 Dec-11 Purchase Return 175 330 103 Dec-21 Sales 220 175 105 480 1,05,600 560 98,000 900 94,500 900 -1,800 225 103 227 Dec-22 Sales -2 900 2,02,500 450 46,350 900 2,04,300 450 46,350 2,50,650 Return 103 Dec-31 Balance 46,350 2,96,300 Date Transac Inventory Report - Wooden Cupboards Purchased Cost of Goods Sold Cost per Total Cost per Total Unit unit Cost unit Cost Unit Dec-01 Balance Ending Inventory Cost per Total Unit unit Cost 609 150 91,3501 315 158) 49,770 460 159 73,140 225 160 36,000 609 150 91,350 158 49,770 460 159 73, 140 225 160 36,000 311 162 50,382 1,420 156.58 2,22,344 Dec-03 Purchase 311 162 50,382 315 Dec-04 Sales 500 156.58 78,290 -25 156.58 -3,914 Dec-05 Sales Return Dec-31 Balance 1,445 156.58 2,26,258 2,26,258 50,382 74,376