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2 marksMaterial Control and Inventory Valuation

CAPE Accounting Unit 2 · 2016 · Paper 2 · Question 1(b)(ii)

During inflation when market prices for purchased materials rise, analyze the impact under the LIFO stock valuation method.

Explain what happens to the value of closing inventory.

The mark scheme is shown once you've answered.

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Other parts of this question

  1. 1(a)State the classification for EACH of the 10 listed cost items.[10 marks]
  2. 1(b)(i)Explain what happens to the cost of material issued.[2 marks]
  3. 1(b)(iii)Explain what happens to profit.[2 marks]
  4. 1(c)(i)Advise management whether it would be profitable to make or buy Component ABC.[6 marks]
  5. 1(c)(ii)Advise management whether to accept a special offer of $1750 per unit from an outside company for Product XYZ, providing justification.[9 marks]
  6. 1(d)(i)Compute the predetermined production overhead rate for 2015.[2 marks]
  7. 1(d)(ii)Calculate the over/under applied overhead for December 2015.[2 marks]

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