Costing for Material Quiz

Which of the following represents the dominant cost in a manufacturing organization?

• Indirect materials

• Direct materials

• Labor costs

• Overhead costs

Who is responsible for ensuring optimal stock levels are maintained in a company?

• Accounting department

• Purchasing department

• Stores department

• Production department

What action is initiated when materials reach their re-order point?

• A purchase order is sent

• A purchase requisition is initiated

• Materials are issued immediately

• A supplier is paid

The purchase order is primarily handled by which department?

• Accounting

• Purchasing

• Sales

• Warehousing

Upon receipt of materials, what document is prepared to list received materials?

• Sales invoice

• Purchase order

• Goods received note (GRN)

• Material requisition form

What document helps ensure payment is made only for goods received?

• Purchase order

• Goods received note (GRN)

• Supplier’s delivery note

• Material requisition form

What is the primary purpose of a Stores Requisition (SR)?

• To track materials issued for a specific job or department

• To order new materials from suppliers

• To process supplier payments

• To update the company’s financial statements

What are the three commonly used pricing methods for raw materials?

• FIFO, LIFO, WACO

• FIFO, LIFO, ABC

• Weighted Average, ABC, LIFO

• Standard cost, FIFO, Variable cost

Why does IFRS prohibit the LIFO method?

• It inflates the cost of goods sold

• It can distort financial statements and understate earnings

• It is too complex to apply

• It does not reflect actual inventory movements

Which inventory pricing method issues materials based on the oldest stock first?

• Last In First Out (LIFO)

• First In First Out (FIFO)

• Weighted Average Cost (WACO)

• Just-In-Time (JIT)