Working notes should form part of the respective answer. a) Tharun Electronics manufactures electronic home appliances. It follows weighted average Cost method for inventory valuation. Following are the data of component X: Date Particulars Units Rate per unit 15-12-23 Purchase Order-008 10,000 9,930 30-12-23 Purchase Order-009 10,000 9,780 01-01-24 Opening stock 3,500 9,810 05-01-24 GRN-008 10,000 (against the Purchase Order-008) 05-01-24 MRN**-003 500 (against the Purchase Order-008) 06-01-24 Material Requisition-011 3,000 07-01-24 Purchase Order-010 10,000 9,750 10-01-24 Material Requisition-012 4,500 12-01-24 GRN-009 10,000 (against the Purchase Order-009) 12-01-24 MRN-004 400 (against the Purchase Order-(009) 15-01-24 Material Requisition-013 2,200 24-01-24 Material Requisition-014 1,500 25-01-24 GRN-010 10,000 28-01-24 Material Requisition-015 4,000 31-01-24 Material Requisition-016 3,200 (against the Purchase Order-010) *GRN- Goods Received Note; **MRN- Material Returned Note Based on the above data, you are required to CALCULATE: i) Re-order level ii) Maximum stock level iii) Minimum stock level iv) PREPARE Store Ledger for the period January 2024 and DETERMINE the value of stock as on 31-01-2024. v) Value of components used during the month of January, 2024. vi) Inventory turnover ratio.See answer
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Working notes should form part of the respective answer a Tharun Electronics manufactures electronic home appliances It follows weighted average Cost method for inventory valuation Following are the…
Question
Working notes should form part of the respective answer. a) Tharun Electronics manufactures electronic home appliances. It follows weighted average Cost method for inventory valuation. Following are the data of component X: Date Particulars Units Rate per unit 15-12-23 Purchase Order-008 10,000 9,930 30-12-23 Purchase Order-009 10,000 9,780 01-01-24 Opening stock 3,500 9,810 05-01-24 GRN-008 10,000 (against the Purchase Order-008) 05-01-24 MRN**-003 500 (against the Purchase Order-008) 06-01-24 Material Requisition-011 3,000 07-01-24 Purchase Order-010 10,000 9,750 10-01-24 Material Requisition-012 4,500 12-01-24 GRN-009 10,000 (against the Purchase Order-009) 12-01-24 MRN-004 400 (against the Purchase Order-(009) 15-01-24 Material Requisition-013 2,200 24-01-24 Material Requisition-014 1,500 25-01-24 GRN-010 10,000 28-01-24 Material Requisition-015 4,000 31-01-24 Material Requisition-016 3,200 (against the Purchase Order-010) *GRN- Goods Received Note; **MRN- Material Returned Note Based on the above data, you are required to CALCULATE: i) Re-order level ii) Maximum stock level iii) Minimum stock level iv) PREPARE Store Ledger for the period January 2024 and DETERMINE the value of stock as on 31-01-2024. v) Value of components used during the month of January, 2024. vi) Inventory turnover ratio.
Basic Answer 1 people found it helpful
Step 1: Calculate Weighted Average Cost
First, we need to determine the weighted average cost of component X. We’ll consider only the purchases and opening stock up to the beginning of January 2024.
| Date | Particulars | Units | Rate per unit | Total Value |
|---|---|---|---|---|
| 01-01-24 | Opening stock | 3,500 | 9,810 | 34,335,000 |
| 05-01-24 | GRN-008 (PO-008) | 10,000 | 9,930 | 99,300,000 |
| Total | 13,500 | 133,635,000 |
Weighted Average Cost = Total Value / Total Units = 133,635,000 / 13,500 = 9,898.52 (approximately)
Step 2: Prepare Store Ledger for January 2024
The store ledger tracks the movement of inventory. We’ll use the weighted average cost calculated above for the beginning inventory. New purchases will be added at their respective costs.
| Date | Particulars | Receipts (Units) | Issues (Units) | Balance (Units) | Rate (per unit) | Value |
|---|---|---|---|---|---|---|
| 01-01-24 | Opening Stock | 0 | 0 | 13,500 | 9,898.52 | 133,635,000 |
| 06-01-24 | Material Requisition-011 | 0 | 3,000 | 10,500 | 9,898.52 | 103,934,000 |
| 10-01-24 | Material Requisition-012 | 0 | 4,500 | 6,000 | 9,898.52 | 59,391,000 |
| 12-01-24 | GRN-009 (PO-009) | 10,000 | 0 | 16,000 | 9,780 | 156,480,000 |
| 12-01-24 | MRN-004 (PO-009) | 0 | 400 | 15,600 | 9,780 | 152,232,000 |
| 15-01-24 | Material Requisition-013 | 0 | 2,200 | 13,400 | 9,780 | 130,856,000 |
| 24-01-24 | Material Requisition-014 | 0 | 1,500 | 11,900 | 9,780 | 116,220,000 |
| 25-01-24 | GRN-010 (PO-010) | 10,000 | 0 | 21,900 | 9,750 | 213,675,000 |
| 28-01-24 | Material Requisition-015 | 0 | 4,000 | 17,900 | 9,750 | 174,525,000 |
| 31-01-24 | Material Requisition-016 | 0 | 3,200 | 14,700 | 9,750 | 143,325,000 |
Step 3: Determine Values
- **i) Re-order level