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TUTORIAL: MATERIAL
1. Calculate EOQ, No. of order and total cost for the following questions:
a. Demand 1500 units per month
Ordering cost RM 50 per order
Cost of material RM 12.50 per unit
Carrying cost 10% per annum on cost of material
b. Annual requirement 20000 units

Ordering cost RM 12 per order
Holding cost 10% on purchase price
Purchase price RM 30 per unit
2. Calculate ROL, min stock level, maximum stock level and average stock level
a. Average usage 1300 units

Minimum usage 1000 units
Maximum usage 1350
Reorder quantity 9000 units
Delivery is reliable expected at the fifth day of order
b. The following information is provided for raw material X

Average usage 2150 kg per day
Minimum usage 1600 kg per day
Maximum usage 2700 kg per day
EOQ 18000 kg
The stock level is reviewed at the end of each day and an order is placed the
following day if the reorder level has been reached. Delivery can be expected to
be between 2-4 days from the day of ordering.
3. Jelita Bhd, a local manufacture assembles a product called JJ. Each unit of JJ requires
two kilograms of material N.
The demand for product JJ is 2,000 units per month. The company buys the material N
from a supplier at a purchase price of RM 10 per kilogram.
The ordering cost of material N is RM 30 per order. The material then been kept in the
store with the total storage cost of RM 2 per kilogram
As a new appointed costing executive, you are required to advice the management in
making better decision.
REQUIRED:
a) Tabulate a table for no of order of 20,30, 40, and 50, to determine the most
economical quantity to order.
b) Plot a graph base on table (a) and clearly show the EOQ.
4. A company produces a product called BB. One unit of BB required 1 unit of material JJ
and a quarter kilogram of material KK. The demand for product BB is constant at 2,000
units for each quarter. JJ had been purchased from AX Sdn Bhd while KK is bought from
Lin Sdn Bhd.
Ordering cost for JJ is RM 15 per order, excluded the clerical cost of RM 1 per order.
Holding cost is RM 2.00 per unit which included the breakage cost of RM 0.20 per unit.
While the ordering and holding cost of KK is half of the cost incurred for JJ.
Required: Calculate the EOQ, number of order and total cost for the materials
5. The manager of Ayang Sdn. Bhd., a curry puff manufactures told that her company has a
constant demand of 25,000 pieces of curry puff per annum. Each 10 pieces of curry puff
requires 0.25 kg of flour and an egg. They bought the materials from the different
supplier.
Flour had been bought from AZ Ltd at RM 1.20 per kg. Ordering cost per order is RM 10
inclusive the transportation cost. The holding cost is RM 0.20 per kg.Eggs are bought
from ZZ farm nearby at RM 0.30 each. The storage cost of an egg is RM 0.05. This does
not include the breakage cost of RM 0.03 per egg. Ordering cost is RM 4 per order.
Required: Calculate the EOQ, number of order and total cost for the materials.
6. A company, records the following transactions for the first six months of the year.
Purchase date Quantity purchased Gross Value Discount

(Units) (RM)
Feb 1 100 30,000 nil

March 1 200 60,000 2.5%
May 1 300 90,000 5%
Sales Date Quantity sold Total sales value

(Units) (RM)
February 75 30,000
May 350 175,000
There was an opening stock at January 1st of 50 units valued at RM 12,500.
REQUIRED:
Prepare store ledger card for the six months using perpetual inventory system at LIFO
method.
7. A businessman starts a business on 1st January 2004, and during the next six months,
the following transactions occurred:
Purchases
Date Quantity (units) Total cost (RM)
1st January 200 32,400

8th January 400 68,400
10th March 600 108,000
12th April 400 63,000
15th June 500 63,000
Sales
Date Quantity (units) Total Sales (RM)
20th February 500 112,500
30th April 600 121,500
25th June 400 68,400
A physical stock count on 30th June 2004 discovered that there are 500 units of stock held.
Prepare store card for the above transaction using FIFO, LIFO and Weighted Average methods.

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TUTORIAL: MATERIAL

b. Annual requirement 20000 units

a. Average usage 1300 units

b. The following information is provided for raw material X

Purchase date Quantity purchased Gross Value Discount

Feb 1 100 30,000 nil

Sales Date Quantity sold Total sales value

There was an opening stock at January 1st of 50 units valued at RM 12,500.

1st January 200 32,400

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