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accounting for inventory

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › accounting for inventory

  • This topic has 4 replies, 2 voices, and was last updated 10 years ago by John Moffat.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • November 11, 2014 at 10:56 am #209055
    archana
    Member
    • Topics: 24
    • Replies: 62
    • ☆☆

    help me with these listed terms below..
    1.goods received note and
    delivery note

    2,Does GRN is given by customer and delivery note by supplier??

    3.is materials returned note and goods returned note similar?
    4.what does capital tied up means?
    5.the following documents are used in accounting for raw materials. which of the documents can be used to update stores ledger cards for inventory??
    GRN
    Materials returned note
    materials requisition note
    delivery note

    November 11, 2014 at 1:56 pm #209111
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54709
    • ☆☆☆☆☆

    GRN is prepared by the receiver of the goods.
    Delivery note is prepared by the sender of the goods.

    Materials returned note and goods returned note mean the same thing.

    Capital tied up is cash being invested in an asset.

    5. the first two

    November 12, 2014 at 4:36 am #209236
    archana
    Member
    • Topics: 24
    • Replies: 62
    • ☆☆

    thank yuh sir 🙂

    November 12, 2014 at 9:12 am #209266
    archana
    Member
    • Topics: 24
    • Replies: 62
    • ☆☆

    what is meant by buffer inevntory?? buffer inventory is 700 components. annual holding cost per order is 3. EOQ is 1500 components. materials usage is 28000 components.what is the total annual cost of holding inventory of components?

    November 12, 2014 at 12:54 pm #209341
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54709
    • ☆☆☆☆☆

    Buffer inventory is another word for safety inventory. It means we hold extra inventory (over what we actually need) just to be safe.

    In your question, the average inventory is 1500/2 (as usual with an EOQ of 1500) + 700 (the extra that we are keeping all year) = 1450 units.

    To get the total annual cost multiply this by $3

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