QUESTION FOUR (20 Marks)

4.1

REQUIRED

Complete the table below for the transactions provided using the following methods of inventory valuation:

1. Weighted average cost (7 marks)
2. FIFO (6 marks)

	Purchases			Issues/Returns to supplier			Balance
Date	Quantity	Price	Amount	Quantity	Price	Amount	Quantity	Price	Amount

INFORMATION

The following information was extracted from the records of Planet Limited, a manufacturing company, for an inventory item called Fitness Plus used in Project A for March 2021:

March	Transaction details
01	Opening inventory: 6 000 units @ R40 each.
07	Invoice received for 144 000 units @ R44 each.
09	Transferred 105 000 units to the production department.
10	Returned 15 000 damaged units (purchased 07 March) to the supplier.
16	Invoice received for 30 000 units at R48 each.
22	Transferred 45 000 units to production.
30	Invoice received for 15 000 units @ R52 each.

4.2

Popi Limited uses the standard costing system. The standards for Product A are as follows:
Material	8 kilograms at R5.30 per kilogram
Labour	8 hours at R100 per hour
Variable overheads	R40 per labour hour
Fixed overheads	R50 000
Normal production	29 000 units per month
Actual information for the month May 2021 is:
Material	182 000 kilograms at R6.20 per kilogram
Labour	198 000 hours at R73 per hour
Variable overheads	R35 per labour hour
Fixed overheads	R31 200
Production	25 000 units

	Required
4.2.1	Calculate the material quantity variance.	(2 marks)
4.2.2	Calculate the variable manufacturing overhead efficiency variance.	(2 marks)
4.2.3	Fixed manufacturing overhead volume variance.	(3 marks)