Costing for Material Quiz

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

• A) Accounting department

• B) Purchasing department

• C) Stores department

• D) Production department

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

• A) A purchase order is sent

• B) A purchase requisition is initiated

• C) Materials are issued immediately

• D) A supplier is paid

The purchase order is primarily handled by which department?

• A) Accounting

• B) Purchasing

• C) Sales

• D) Warehousing

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

• A) Purchase order

• B) Goods received note (GRN)

• C) Supplier’s delivery note

• D) Material requisition form

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

• A) FIFO, LIFO, WACO

• B) FIFO, LIFO, ABC

• C) Weighted Average, ABC, LIFO

• D) Standard cost, FIFO, Variable cost

Why does IFRS prohibit the LIFO method?

• A) It inflates the cost of goods sold

• B) It can distort financial statements and understate earnings

• C) It is too complex to apply

• D) It does not reflect actual inventory movements

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

• A) Last In First Out (LIFO)

• B) First In First Out (FIFO)

• C) Weighted Average Cost (WACO)

• D) Just-In-Time (JIT)

Which pricing method reduces price fluctuation effects?

• A) FIFO

• B) LIFO

• C) WACO

• D) Standard cost

What is the main objective of a Stock Control System?

• A) To increase the stock levels at all times

• B) To ensure stocks are sufficient for production while minimizing costs

• C) To order excessive stock to avoid shortages

• D) To reduce supplier costs only

Economic Order Quantity (EOQ) is calculated to:

• A) Maximize stock levels

• B) Minimize carrying and ordering costs

• C) Increase production costs

• D) Reduce supplier pricing