2.1. Costs and cost behaviour
A subsection of Accounting, 9706, through 2. Cost and management accounting (AS Level)
Listing 10 of 370 questions
For Examiner's Use At 1 January 2013, Brahms had opening inventory of 50 teddy bears at a purchase price of $30 each. His transactions for the first three months of 2013 were: Date Purchases Purchase price (per unit) Sales Jan $30.00 $30.50 Feb $31.00 March $31.50 $32.00 No other transactions took place during these months. Each teddy bear was sold for $50. REQUIRED Calculate the value of the inventory at 31 March 2013 using the following methods of valuation. FIFO For Examiner's Use AVCO. Using each method of valuation, calculate the gross profit for the three months ending 31 March 2013. FIFO AVCO. For Examiner's Use State one advantage and one disadvantage of using the following methods of inventory valuation: FIFO AVCO. Brahms currently uses FIFO to value his inventory. He is considering changing the method to show a lower profit each year. State two reasons why he should not do this. Make reference to any relevant accounting principles, concepts and conventions. For Examiner's Use Charlie runs a similar business and also completes his financial year on 31 March 2013. He is unable to value his inventory at that date. The stock count takes place on 7 April 2013. The value at that date is $1000. Between the two dates the following transactions had occurred. Sold goods at a selling price of $120. (Charlie normally marks up his goods for sale at 25%. These goods were in stock on 31 March 2013.) Purchased goods at an invoice price of $70. Goods sold to a customer for $80 had been returned by them. (The sale took place on 28 March 2013.) Damaged goods were discovered which had been included at a cost of $30. Charlie could only sell them for $20. REQUIRED Calculate the value of Charlie’s closing inventory at 31 March 2013.
9706_s13_qp_23
THEORY
2013
Paper 2, Variant 3
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370