# Cost Accounting Tutorial Chapter 2 (Diploma)

Topics: Costs, RM postcode area, Total order Pages: 6 (388 words) Published: February 20, 2013
COMPREHENSIVE ILLUSTRATION

QUESTION 1

ABC Bhd uses material X which obtain from an outside supplier. Each delivery of material X consists of 30,000 kg at a cost of RM5 per kg. The cost of ordering is RM10 per order. The lead time for delivery can vary between 12 and 18 days and the rate of usage of material X also varies between 320 and 480 kg per day. Stockholding cost amount to 9% per annum of the average stockholding value.

Required: Calculate the following:

|Re-order level in kg | | | | | | | | | | | | | | |Minimum stock level in kg | | | | | | | | | | | | | | |maximum stock level in kg | | | | | | | | | | | | | | |The average stock in kg | | | | | | | | | | | | | |

QUESTION 2

A company has budgeted to use 60,000 units of component Y during the forthcoming year. Production will be distributed evenly throughout the year. Assume the company is carrying no safety stock. The following additional information is available:

|Cost of component Y |RM18.00 per unit | |Ordering cost |RM60.00 per unit | |Stockholding costs |10% of the average stock value per annum...