ACCOUNTING FOR MATERIAL COST:

Material control; is the process of planning, organization and controlling the procurement,
storage and usage of materials so as to achieve objectives of efficiency and economy. Material
control consists of three levels as follows

I. Quantity control
II. Financial control
III. Quality control

Objectives of material control, the following are the main objective of material control;

I. To provide the required information to the management so as to help the management on

taking inventory decisions.
II. To minimize the total cost(i.e. ordering and caring cost)
III. To avoid the situation of under stocking by ensuring all material are manage in right time
and delivery at right place.
IV. To maintain proper and up to date records of inventory.
V. To avoid wastage and losses during storage and usage

Purchase of material; is the procurement of material, components, supplies required for use in
production and other departments of enterprises to run Smooth the organization activities
effectively and efficiency.

Objectives of purchasing;

The objectives of purchasing is to procure the material that required in the organization ensuring
materials are

a) Right quality; the right quality is that features and characteristics of the product or service
which can be purchased at the lowest cost to fulfill the needs or satisfy the intended
purpose.
b) Right Quantity; the excess purchases should be avoided. If result in overstocking which
will increase the holding cost and the purchasing of low level Quantity should be avoided
to avoid understocking so as to avoid frequently placing order.
 c) Right time; this means exact time of delivery. It should be taken into account to ensure that
the material required delivered within the required time. The lead time should be
maintained external lead time and internal lead time.
d) Right price; the price should be reasonable, fair, competitive and affordable. Ideally
minimizing the profit, it should be fair to both buyer and seller.
e) Right source; source can be supplies for procurement of goods a contractors for
procurement of works and a services providers for procurement of services

Function of purchase department;

The purchase department has many function in the organization. The following are the function of
the department.

I. To purchase the right quality of material in the right quantity at right price and at right time.
II. To receive the purchase requisition from the department which needs the material( User
department)
III. To select the supplier from whom a materials are to be purchased.
IV. To follow up the purchase order
V. To place the purchase the purchase order with the selected supplier.

Purchase Procedures; depending up on the size and nature of the operation the purchase procedure
may differ from organization to organization. However there is main steps involved in purchasing
procedure are as follows.

Step1.receipt of purchasing requisition

Step 2. Selection of supplier.

Step 3. Preparation, placement and follow are of purchase order.

Step 4. Receipt of materials

Step 5. Inspection of materials.

Step 6. Return of rejected materials.

Step 7. Checking and passing of purchasing invoice for payment

Step 8. Making payment to supplier

Storage material; is the act of storing. Material for their safe custody fill these are issued to the
production and other department it is a service function and involves receiving storing and issuing
of materials.

Objectives of storage

I. To ensure and effective and economize use of the available Storage, space and labor.
II. To protect stores from against pilfered, theft, deterioration, evaporation.
III. To identify and locate the stores without delay and issues stores immediately.
IV. To prevent overstocking and understocking of stores.
V. To ensuring uninterrupted supply of stores to the production and services department.

Function of stores department;

I. To provide adequate and proper storage for every item.

II. To issue material against proper stores requisition
III. To keep the material in good condition to avoid pilferage, wastage and deterioration.
IV. To ensure that the stores neither exceed the maximum level nor below the minimum level
at any time
V. To minimize the storage handling and maintaining cost.
VI. To issue purchase requisition to the purchase department when the stock of material
reaches the reorder level (i.e. the level at which the next oared should be placed
immediately).

Documents Used in store; in handling store it is important to have the document that will be used
for the future reference or dealing with any disputes that will rise against the materials stored the
following are the document used in stores.

I. Purchase requisition note. This document prepared by the store keeper to the purchasing
officer for the materials requested or needed for use.
II. Bin card; This document used for recording the materials that are Received and issued in
the store, this document records the materials goes out to the store
III. Material return note; this document allows the unused materials to be returned to the store
from the production department or user department.
 IV. Material transfer note; this document allows the materials to be transferred from one
location to another. Example at construction of IAA. When the material transferred from
PGD site to hostel site this document should be fulfilled.
V. Billed materials. It is of master requisition listing all the materials and parties necessary for
a particular or typical job or production run.

Material issue procedure; material coming- process of reviving demanded Lithe proven
Selecting Ames required and handling Him Ove

The following base documents are word for issue of materials to production department;

a) Material requisition Cur cores requisition) - is a document which is used to authorize and
records the issue of material from the store.
b) Bill of materials (material specification list) - is a list of standard quantities of all materials
required for a particular job or work order or a process.

Classification of materials;

1. ABC Analysis; the materials are grouped into three catenae’s Bering into values and
materiality of this materials

A-group: Represent the substantial amount of fund invested in materials on the group, the
maternal item in group are Critical to the function and operation of an organization and because of
this the inventory levels must be carefully monitored.

A-group item normally takes 70% of the investment in inventory

B-group: Are important to the firm but are not critical, ace for items. About 20% of all materials

C-Group: Are not that all important to the operation of the firm but call necessary. But c-group
take 10% of all inventory items.
 2. Ammonals coding system.

Coding is the proses of assigning of some symbols numerical or alphabetical

Example

Material items. Code

Cement. 001

Simba. 0011

Pc pipe. 0012

Conduit pipe. 0013

Maine board. 0022

Economic Order Quantity (EOQ)

ls the optimum or the most favorable quantity that should be purchased each time the purchase
are to be made, EOQ is where the cost of carrying inventory is equal to the ordering costs and be
determined using three methods which is

I. Equation method.

EOQ = √2𝐷𝐶𝑜/𝐶𝑐

II. Tabulation Method.

III. Graphic Method

Where;

D = Total demand in year or Annual usage in unit

Co = Represent total Ordering Cost per order

Cc = Represent total carrying costs per unit per annum

EOQ= Represents Economic Order Quantity.

Stock level; critical level, these levels are used for control purpose, they are expected to be
monitored regularly.

Re-order level; this provides amount when the economic Order Quantity Should be ordered. Is a
level at purchase order should be initiated for fresh Supplies

Re order level = Maximum daily usage X maximum lead time or period

Minimum Stock level (min Stock level); This is maintained to prevent the stock outs, it is
essentially a safety or buffer stock which act as a Cu shim against stock out The level should be
maintained to ensure the stock do not drop down to this level of inventory.

Min stock level = Re-order level - [Average rate of Consumption X Average lead time)

Maximum Stack level (Max stock level); is the level of which the inventory should not exceed
to undergo overstocking or the uppermost amount of stock the company can maintain at the any
time. (Level at which stock should not be allowed to rise)

Max stock level = [Re-order level + ECG]-[mining Wage x minimum lead time]

Danger level; is the level below the minimum or safety stock level. It represent stage where
immoderate steps are taken for getting stock replenished, otherwise will result into production
Stoppage.

Average stock level; is the level where the stock should be maintained at the constant to ensure
not exceed or overstocking the balance levels.

𝑚𝑎𝑥𝑖𝑚𝑢𝑚 𝑠𝑡𝑜𝑐𝑘 𝑙𝑒𝑣𝑒𝑙+𝑚𝑖𝑛𝑖𝑚𝑢𝑚 𝑠𝑡𝑜𝑐𝑘 𝑙𝑒𝑣𝑒𝑙 𝑚𝑖𝑛𝑖𝑚𝑢𝑚 𝑠𝑡𝑜𝑐𝑘 𝑙𝑒𝑣𝑒𝑙+𝑅𝑒−𝑜𝑟𝑑𝑒𝑟 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦

2
OR
2
Method of pricing Materials / issuing materials

In issuing the material it is hard to recertify the Value of closing stock and the cost of materials.
So this method should be used in pricing. The materials, the following are the method used in
pricing materials

I. First in first. Out (FIFO) method; this method used to price the inventory at the earliest
cost. This means that has unused materials closing stocks) are constituted by the goods
which were most recently purchased. The oldest cast are used first for accounting purpose.

II. Last in First Out (LIFO) Method; this method based on the assumption that goods that
received last are issued first, Cost of issue tend to be nearer current market prices because
it represent the cost of current purchases.

III. Simple Average prang method; this method based on the assumption that the identity
of materials when put on the stores is lost and materials are received in uniform loss of
some quantity.

𝑇𝑜𝑡𝑎𝑙 𝑢𝑛𝑖𝑡 𝑝𝑟𝑖𝑐𝑒 𝑜𝑓 𝑎𝑙𝑙 𝑙𝑜𝑡 𝑖𝑛 𝑠𝑡𝑜𝑟𝑒

Average price = 𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑢𝑛𝑖𝑡 𝑝𝑟𝑖𝑐𝑒

Both costs of materials issued and closing stock tend to reflect actual cost

Weighted Average price / Method Weighted Average Cost method (WAC); this method is
based on the assumption that each issue of goods consists of due proportion of the early lost.

𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 𝑚𝑎𝑡𝑒𝑟𝑖𝑎𝑙 𝑖𝑛 𝑠𝑡𝑜𝑐𝑘

𝑇𝑜𝑡𝑎𝑙 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑜𝑓 𝑚𝑎𝑡𝑒𝑟𝑖𝑎𝑙 𝑖𝑛 𝑠𝑡𝑜𝑐𝑘
QUESTION 3.1 (a)

Stock level; means the quantity of goods inventory that a business has available at a given point
in time. Through stock level the business man help to ensure that the right amount of stock is
maintained to meet the customer demand without overstocking or understanding. The following
are the factors which must be considered in selling stock levels.

Lead time; the time it takes for four supplier to deliver your order. This factor is very important
to consider when we lead time by setting your records point to avoid stock outs.

Inventory optimization; this is the process of finding the optimal balance between inventory
cost and service level. Also it can help you to optimize your inventory using tools like inventory
analysis and inventory classification.

Reorder point; the minimum level of inventory that determine when you should Re-order by
setting your Reorder quantity you must consider both customer demands and lead time

Safety stock; the extra stock you keep on hand to avoid stock outs in case of an expected demand
spike or mishap also maintain a buffer stock to account for uncertainties in demand and supply.

Order Quantity; determine the optimal order quantity using method like economic Order
Quantity which helps minimize total inventory costs by balancing ordering and holding costs.

Therefore; by considering this factors business can set appropriate stock level that their
operational goals and customer satisfaction.

QUESTION 3.1

(b) Data Given

Maximum stock level = (Pre-order level + EOQ)-(minimum usage × minimum lead time)

But,

Re-order level = maximum usage × maximum lead time

 Re-order level=400units /days ×25days=10,000units.

EOQ =5,000units

Minimum usage =200units per day

Minimum lead time=20days

Required maximum stock level =?

From,

Maximum stock level = [Re-order level+ EOQ] - (minimum usage × minimum lead time)

Maximum stock level= (10,000+5000) - (200 ×20)

Maximum stock level =15,000 - 4000 =11,000

Maximum stock level will be 11,000units.

II. Minimum stock level

From,

Minimum stock level= [Re-order level - (normal usage × average lead time]

But,

Re-order level = 10,000 units

Normal usage= maximum usage+ minimum usage/2

Normal usage=400units/ days +200units/days/2

Normal usage= 300 units/ days

Average lead time = Minimum lead time+ maximum lead time

Average lead time = 20 +25/2

Average lead time =22.5days

Now

Minimum stock level= 10,000 units - [300units/ days× 22.5days]

 Minimum stock level =3,250units.

III. Re-order stock level

From,

Re-order stock level = maximum usage × maximum lead time

Re-order stock level = 400 units/days × 25days

10,000 units.

Re-order stock level= 10,000units.

QUESTION 3.2 (a)

(i) Inventory re-order level

From,

Inventory re-order level=maximum usage × maximum lead time

But,

Maximum usage= 30,000units/ week

Maximum lead time=200days _ to convert into weeks

1 week=7 days

? =200days

7days =200weeks.days

7days =7days

28.5weeks

Now,
 Inventory re-order level=30,000units/ weeks × 28.5 weeks

Inventory re-order level=855,000 units.

(ii) Minimum inventory level

From, Minimum inventory level= Re-order level - (normal usage ×average lead time)

Minimum inventory level= Re-order level (normal usage ×average lead time)

But,

Normal usage= maximum usage + minimum usage/2

Normal usage=5000+30,000/2

Normal usage=17,500units/week.

Average lead time= maximum lead time+ minimum lead time/2

Average lead time= 200+100/2 =300/2 = 150days

150days then to convert into week

1week= 7days

? =150days

7days= 150week.days

7days= 7days

Average lead time=21week.

Now,

Minimum inventory level=855,000unit-(17500×21)

=855,000units-367,500

Minimum inventory level=487,500units.

iii) Economic order quantity

But,
Annual demand (D) = normal usage × number of weeks in year
Normal usage = 17,500units/weeks
Number of weeks in year=52weeks
Annual demand (D) =17,500units/week ×52weeks
D=910,000units
Co =TZS 360,000 per order
Cc =5/100×5000×52 weeks=13000TZS.
Now,
From,
Economic order quantity (EOQ) =√2DCo/Cc
(EOQ)=√2×910,000×360,000/13,000
(EOQ)=50,400,000 units
Economic order quantity will be 50,400,000units.

iv) Maximum inventory level

From,

Maximum inventory level= [Re-order level + EOQ]-[minimum usage ×minimum lead time]

Maximum inventory level= [855,000+50,400,000]-[5000×100/7]

Maximum inventory level=51,185,000units.

 QUESTION 3.2 (b)

Advantages of using inventory management to manage inventory level

i. Performance measurements.

ii. Cash flow management.

iii. Inventory optimization.

iv. Improved decision making.

v. Bench marking.

Disadvantages of using inventory management to manage inventory level;

i. Data dependency

ii. Focus on quantitative data

iii. Over simplification

iv. Logging indicators.

v. Not one size fits all.

QUESTION 3.3 (i)

Reorder stock level=?
From
Reorder stock level= Maximum usage x Maximum lead time
But
Maximum usage = 4500units/month
Maximum lead time= 2months
Reorder stock level= 4500units/month x 2month
So the Reorder stock level will be 9000units
(ii) Maximum stock level=?
From
Maximum stock level= [Re-order level + EOQ]- [Minimum usage x Minimum lead time]
But
Re-order level= 9000units
EOQ = 3000units
Minimum usage = 1500
Minimum lead time = 1
Maximum stock level= [ 9000+3000] – [1500x1]
Maximum stock level= 12,000-1500
The maximum stock level will be 10,500units

(iii) Minimum stock level =?

From
Minimum stock level = Re-order level – [ Normal usage x average lead time]
But
Normal usage =3000unit/month
Average lead time=1+2/2= 1.5month
Re-order level= 9000unity
Minimum stock level= 9000- [3000x1.5]
Minimum stock level= 9000- 4,500
The minimum stock level will be 4,500units

(iv) Average stock level =?

From
Average stock level= Maximum stock level+ Minimum stock level
2
Average stock level = 10,500units + 4,500units
2
The average stock level will be 7500units

QUESTION 3.4
FIFO METHOD ON JUNE
Date Receipt (000) Issue (000) Balance (000)
Details Q UP V Q UP V Q UP V
Opening 100 15 1,500
1st /06 Received 200 20 4,000 300 5,500
30th/06 Received 100 30 3,000 400 8,500
30th/06 issued 100 15 1,500 300 7,000
30th/06 issued 170 20 3,400 130 3,600

(i) Value of closing stock = (30,000x20) + (100,000x30)

= 600,000+ 3,000,000
The value of closing stock will be TZS 3,600,000
(ii) Amount of cost of goods sold for June
From
COGAS= Opening stock+ purchase -closing stock
= 1,500,000+ 4000,000+3,000,000-3,600,000
The amount of cost of goods sold will be TZS4,900,000
 (iii) PROFIT OR LOSS FOR JUNE
States Tsh Tsh
Sales 5,725,000
Less: cost of sales
Opening stock 1,500,000
Add: purchases 7,000,000
8,500,000
Less: Closing stock (3,600,000) (4,900,000)
Gross profit 825,000
Less: general Administration expenses (125,000)
PROFIT 700,000

QUESTION 3.5 (i)

FIFO METHOD FOR WEMA CO.
Date Receipt Issue Balance
Details Q UP V Q UP V Q UP V
12/03 Received 200 60 12,000 200 60 12,000
22/03 Received 400 80 32,000 600 44,000
31/03 Received 400 100 40,000 1000 84,000
01/04 issued 300 60,80 20,000 700 64,000
(ii)
LIFO METHOD FOR WEMA CO.
Date Receipt Issue Balance
Details Q UP V Q UP V Q UP V
12/03 Received 200 60 12,000 200 60 12,000
22/03 Received 400 80 32,000 600 44,000
31/03 Received 400 100 40,000 1000 84,000
01/04 issued 300 100 30,000 700 54,000
(iii)
WEIGHTED AVERAGE METHOD FOR WEMA CO.
Date Receipt Issue Balance
Details Q UP V Q UP V Q UP V
12/03 Received 200 60 12,000 200 60 12,000
22/03 Received 400 80 32,000 600 44,000
31/03 Received 400 100 40,000 1000 84,000
01/04 issued 300 84 25,200 700 58,800

(iv)
SIMPLE AVERAGE PRICE METHOD FOR WEMA CO.
Date Receipt Issue Balance
Details Q UP V Q UP V Q UP V
12/03 Received 200 60 12,000 200 60 12,000
22/03 Received 400 80 32,000 600 44,000
31/03 Received 400 100 40,000 1000 84,000
01/04 issued 300 80 24,000 700 60,000

(v)
REPLACEMENT PRICE METHOD FOR WEMA CO.
Date Receipt Issue Balance
Details Q UP V Q UP V Q UP V
12/03 Received 200 60 12,000 200 60 12,000
22/03 Received 400 80 32,000 600 44,000
31/03 Received 400 100 40,000 1000 84,000
01/04 issued 300 100 30,000 700 54,000
QUESTION 3.6 (i)
FIFO METHOD FOR WEMA CO.
Date Receipt Issue Balance
Details Q UP V Q UP V Q UP V
12/03 Received 200 60 12,000 200 60 12,000
22/03 Received 400 80 32,000 600 44,000
31/03 Received 400 100 40,000 1000 84,000
01/04 issued 300 60,80 20,000 700 64,000
(ii)
LIFO METHOD FOR WEMA CO.
Date Receipt Issue Balance
Details Q UP V Q UP V Q UP V
12/03 Received 200 60 12,000 200 60 12,000
22/03 Received 400 80 32,000 600 44,000
31/03 Received 400 100 40,000 1000 84,000
01/04 issued 300 100 30,000 700 54,000
(iii)
WEIGHTED AVERAGE METHOD FOR WEMA CO.
Date Receipt Issue Balance
Details Q UP V Q UP V Q UP V
12/03 Received 200 60 12,000 200 60 12,000
22/03 Received 400 80 32,000 600 44,000
31/03 Received 400 100 40,000 1000 84,000
01/04 issued 300 84 25,200 700 58,800
QUESTION 3.7 (a)

(i)FIFO METHOD

Date Receipt Issue Balance

Particular Q UP V Q UP V Q UP V

15/01 Received 400 250 100,000 400 250 100,000

25/01 Received 400 300 120,000 800 300 220,000

20/01 Issue 300 250 75,000 500 145,000

26/01 Issue 300 250 115,000 200 30,000

300

(ii) LIFO METHOD

Date Receipt Issue Balance

Particular Q UP V Q UP V Q UP V

15/01 Received 400 250 100,000 400 250 100,000

25/01 Received 400 300 120,000 800 300 220,000

20/01 Issued 300 300 90,000 500 130,000

26/01 Issued 300 300 80,000 50,000

250
 (iii) WEIGHTED AVERAGE METHOD

Date Receipt Issue Balance

Particular Q UP V Q UP V Q UP V

15/01 Received 400 250 100,000 400 250 100,000

25/01 Received 400 300 120,000 800 300 220,000

20/01 Issued 300 275 82,500 500 137,500

26/01 Issued 300 275 82,500 200 55,000

b) Two methods;

i. Simple average price

ii. Replacement

QUESTION 3.8

Data given

Minimum consumption= 300 units per week

Maximum consumption= 900 units per week

Re-order period= 6 to 10 weeks

Re-order quantity= 3600 units

I. Re-order stock level

=Maximum usage * Maximum lead time

= 900 units/week * 10 weeks

= 9000 units

Re-order stock level is 9000 units

II. Maximum stock level

= [Re-order stock level + Re-order quantity] - [minimum usage * minimum lead time]

= [900 units + 3,600 units] - [300units/week * 6 weeks]

= 12,600 units + 1,800 units/week

=10,800units

Maximum stock level is 10,800 units

III. Minimum stock level

Re-order stock level - [Average usage * Average lead time]

= 9,000 units - [(309+900)/2 * (6+10)/2

= 900units - (600 * 8)

= 9,000units - 4,800units

= 4,200units

Minimum stock level is 4200 units.

(iv) Average stock level

=Maximum stock level + minimum stock level/2

= 10,800 units + 4,200 units/2

=15,000/2

=7500units

Average stock level is 7500 units.

QUEATION 3.9

Data given

Annual usage (D) = 3,600units

Ordering cost per order (Co) =200 Tsh

Carrying cost (Cc) = 20% of average of stock value.

Unit cost =5 Tsh per unit

Required;

i). determining ordering size that minimize annual tatal cost (EOQ)

From EOQ. = √2×D×Co/ Cc

= √2×3,600×200/ 20%×5

= √1,440,000

= 1,200 units

The ordering size that minimize annual total cost is 1200 units.

ii ). Calculate annual acquisition cost

From. Annual acquisition cost = Annual usage × unit cost

= 3,600units × 5 Tsh per unit

= 18,000 Tsh

So, Annual acquisition Cost = 18,000 Tsh

ii ) calculate annual possession cost

From Annual possession cost = acquisition cost + carrying cost + Ordering Cost

Where, ordering cost = Number of order × ordering cost units

But, number of orders = Annual usage / Economic order quantity

= 3,600units × 1,200units
 n =3

The number of orders is 3 orders.

So, the ordering cost Cost = 3 × 200 Tsh

= 600 Tsh

The ordering cost is 600 Tsh

Where Carrying Cost = Average of Economic order quantity × Carrying Cost per unit

Carrying Cost = EOQ/2 × Cc

=.1200/2. × 20% ×5 Tsh

= 600 Tsh

Where Annual possession Cost = 18,000 + 600 + 600

= 19,200 Tsh

The Annual possession Cost = 19,200 Tsh

QUESTION 3.10

i. EOQ

From,

EOQ= √2DCo/Cc

But,

Annual demand (D) =500 * 12=6000

Cost of placing order(Co)=tzs 120

Annual carrying cost (H)=tzs 12

Required EOQ=?

From
 EOQ=√2*6000*120/2

EOQ=346.4 units

ii. Re-order stock level

From,

Re-order stock level= maximum consumption * maximum lead time

90 units/week * 6weeks

Re-order stock level= 540 units

iii. Minimum stock level

From,

Minimum stock level= Re-order level - (normal usage * average lead time)

= 540 - (60 * 5)

= 540 - 300

= 240 units

Minimum stock level= 240 units.

QUESTION 3.11
(i) FIFO METHOD ON JANUARY 2021
Date Receipt (000) Issue (000) Balance (000)
Details Q UP V Q UP V Q UP V
01/1/21 Received 35 5 175,000 35 175,000
01/04/21 Received 10 6 60,000 45 235,000
01/06/21 Issue 25 5 125,000 20 110,000
01/07/21 Received 10 6.5 65,000 30 175,000
01/09/21 Received 15 8 120,000 45 295,000
01/06/21 10 5 50,000
10 6 60,000
10 6.5 65,000
5 8 40,000
35 215,000 10 80,000

Sales (25,000 x 12,000) 300,000,000

(35,000 x 16,000) 560,000,000
Total sales 860,000,000
Less: COGS
Opening stock 0
Add: purchases 420,000,000
Less: Closing stock (80,000,000)
COGS (340,000,000)
GROSS PROFIT 520,000,000
 (ii) WEIGHTED AVERAGE AS AT 2021
Date Receipt (000) Issue(000) Balance(000)
Details Q UP V Q UP V Q UP V
1/01 Received 35 5 175 35 5 170
1/6 Received 10 6 60 45 5.2 232
1/7 Issued 25 5.2 130 20 5.2 104
1/7 Received 10 6.5 65 30 5.6 169
1/7 Received 15 8 120 45 6.4 289
31/12 Issue 35 6.4 224 10 6.5 65

The value of closing stock = 10,000 x 6,500units/Tzs

= 65,000,000units /Tzs
The value of closing stock is 65,000,000Tzs

GROSS PROFIT OBTAINED

Net sales ( 25000 x 12000) + ( 35,000 x 16000) = 860,000,000
Total purchases = 420,000,000Tzs

THE PROFIT OR LOSS OBTAINED WILL BE

Sales 860,000,000
Less: cost of sales
Opening stock 0
Add: purchases 420,000,000
Less: closing stock (65,000,000)
Cost of goods solds (355,000,000)
Gross profit 505,000,000
QUESTION 3.12
SUPPLIERS INVOICE
DETAILS:
Date:05th Dec2024
Invoice NO. 00411
From: Bill To:
Company: SUSACO Company Company: KIBO COMPANY
Adress: P.O.BOX 0152 Adress: P.O.BOX 404
City state: ARUSHA City state: ARUSHA
Phone:0740211948 Phone: 0712298411
Email:[email protected] Email: [email protected]

DESCRIPTION QUANTITY UNITY PRICE AMOUNT

Cola material 1,250,000akg 10,000 12,5000,000
Exeise duty 25% 10,000 x 2500 3,125,000,000
Delivery charge 125,000
Cost of container 25,000 2,000 50,000,000
SUB TOTAL 15,675,125,000
Trade disvcount 20%
Charging price 3,135,025,000
Tax / VAT 18% 564,3044,500
3,699,329,500

Note: 5% cash discount on list price, net of trade discount, if payment is made within 20days
QUESTION 3.13
Data given
Re- order quantity 2,000unity
Re-order level 500unity
Solution
BIN CARD XYZ 444 FOR NJIRO MANUFUCTURING COMPANY
Dates Units ordered and received Unit issues Balance unit
Jan 02,2022 Opening balance 3,000
Jan 08,2022 - 2,000 1,000
Jan 12,2022 - 600 400
Jan 16,2022 2,000 - 2,400
Jan 18, 2022 - 2,500 (100)
Jan 20,2022 2,000 - 2,100
Feb 04,2022 - 2,100 000
Feb 15,2022 - 1000 (1000)
Feb 20,2022 2000 - 1000
Feb 24,2022 - 3,000 (2000)
March 03,2022 - 1,200 (3,200)
March 07, 2022 2,000 - (1,200)
March 13,2022 - 800 (2,000)
March 18,2022 2,000 - 000
March 21,2022 - 1,500 (1,500)

A = 2,000 L = (1000)
B = 2,000 M = 1,000
C = 2,000 N = (20000)
D = 2,000 P = (3,200)
E = 2,000 Q = (1,200)
F = 1,200 R = (2,000)
G = 400 S = 000
H = 2,400 T = (1,500)
I = 100
J = 2,100
K = 00