In this research, group members are required to choose any company from bursa Malaysia and study about their inventories, during this coursework, we mainly focus on the general study about inventories and the inventories of the company- Ajinamoto™
Inventories refer to a company's merchandise, raw materials, and finished and unfinished products which have not yet been sold. These are considered liquid assets. There are various means of valuing these assets, but to be conservative the lowest value is usually used in financial statements. The LCM rule is applied.
* Types of inventories
There are mainly 5 types of inventories for Ajinomoto™ raw materials (eg. Raw husk monosodium glutamate etc.) amounting to RM34,445,868, consumables amounting to RM 4,536,693, work-in-progress amounting to RM2,374,316, and finished goods amounting RM21,445,751. These are the closing inventories for Ajinomoto™
* Manufacturing process.
Ajinomoto™ uses green technology such as bio-cycle technology which improves amino acid, maximizing the usage of natural resources, such as water and energy, the above diagram show the manufacturing process. The main raw materials are raw husk.
* Valuation methods
Ajinomoto™ uses weighted average method. Inventories are stated at the lower of cost and net realisable value. Cost incurred in bringing the inventories to their present location and condition are accounted for as follows : * Raw materials : purchase costs on a weighted average method. * Finished goods and work-in-progess : costs of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. These costs are assigned on a weighted average method.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale.
* Amount of Closing Inventories