- 2 Marks
Question
Material X is a key raw material of XOXO Ltd. The storekeeper is interested in knowing the units they have placed on order because the supporting documents have been destroyed by fire. She is able to provide the following information: Immediately before the fire, materials in inventory were 1,250 units; materials requested by the factory but yet to be supplied were 375 units, and inventory balance was 3,255 units.
What is the amount of material X that XOXO has ordered from its suppliers?
(2 marks)
Answer
To calculate the amount of material X that has been ordered:
Free Inventory = Materials in Inventory + Material on Order – Materials Requested but Not Yet Issued
3,255 units = 1,250 units + Material on Order – 375 units
Material on Order = 3,255 units – 1,250 units + 375 units
Material on Order = 2,380 units
Thus, XOXO Ltd. has ordered 2,380 units of Material X from its suppliers.
- Tags: Inventory Calculation, Inventory Management, Material Ordering
- Level: Level 2
- Topic: Relevant Cost and Revenue
- Series: MAY 2016
- Uploader: Dotse