QUESTION 1: Pun Poon Phua is the managing director of PPP Food Products, a recently established...
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QUESTION 1: Pun Poon Phua is the managing director of PPP Food Products, a recently established manufacturing company based in Kuala Lumpur. He recently approached your firm, ACT Partners, Chartered Accountants, seeking advice in relation to inventory valuation and just-in-time (JIT) inventory management. Mr Phya understands the importance of efficient inventory management in a manufacturing environment. REQUIRED: Draft a memorandum for Mr Phua, managing director of PPP Food Products, that addresses the following issues: For each inventory valuation approach (FIFO, LIFO and Average Cost): a) Describe the main features of the approach (15 marks) b) Explain the effect of the approach on profit and on closing inventory valuation during periods of rising prices. (10 marks) (Total: 25 marks) QUESTION 1: Pun Poon Phua is the managing director of PPP Food Products, a recently established manufacturing company based in Kuala Lumpur. He recently approached your firm, ACT Partners, Chartered Accountants, seeking advice in relation to inventory valuation and just-in-time (JIT) inventory management. Mr Phya understands the importance of efficient inventory management in a manufacturing environment. REQUIRED: Draft a memorandum for Mr Phua, managing director of PPP Food Products, that addresses the following issues: For each inventory valuation approach (FIFO, LIFO and Average Cost): a) Describe the main features of the approach (15 marks) b) Explain the effect of the approach on profit and on closing inventory valuation during periods of rising prices. (10 marks) (Total: 25 marks)
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