Question 2 Arnold buys and sells a component for computers. The transactions for April 2019 are as follows: Date Quantity Unit Total In units Cost Cost 1 April Opening balance 250 1,000 7 April Sales 100 13 April Purchases 200 4.20 840 18 April Purchases 200 4.30 860 19 April Sales 150 27 April Sales 200 28 April Purchases 200 4.25 850 30 April Closing balance 4 400 Required: (a) Calculate the cost of sales and the value of closing stock using: First in First Out Last in First Out (iii) Weighted Average Method (7 marks) (b) Using the sales figures as given above for the monthly demand, ordering costs of 5 per order and holding costs of 10 per year, calculate for Arnold the Economic Order Quantity. (2 marks) Explain the problems of using the Economic Order Quantity method. (5 marks) (c) The E.O.Q. formula is = 2COD V Ch (d) Explain why a company may decide to hold a minimum level of stock. (2 marks) (Total 16 marks)