1. 1.Which of the following is allowed as a cost of inventory? i.Abnormal waste ii.Storage costs iii.Selling costs iv.Variable manufacturing overheads v.General administration overheads

2. 2. Inventories include i.Equipment used in the ordinary course of business ii.Tangible assets lying in the store, which are intended for sale iii.Machinery used in the production process which is for sale iv.Materials and supplies used for maintaining property, plant and equipment v.Intangible assets used in the production process, but not intended for sale

3. 3.By allocating fixed factory overheads on normal production levels, low actual production levels will result in greater fixed overhead allocation to each unit of production. i.True ii.False

4. 4.Inventory excludes i.Goods purchased for resale ii.Finished goods produced iii.Construction works in progress iv.Raw materials

5. 1.Harshan Pvt adhesive warning signs for workplaces. The stock of signs was included in the closing inventory as of 31 December 2017 at a cost of LKR 75 per pack. During the final audit the auditors noted that the subsequent selling price for the inventory at 15th January 2018 was LKR 60 per pack. Furthermore, inquiry reveals that during the physical stock take, a water leakage has damaged the signs and glue. Accordingly in the following week, Harshan Pvt spent a total of LKR 25 per pack for repairing and reapplying the glue to the signs. The net realizable value and inventory write-down (loss) amount to i.LKR 60 and LKR 15 respectively ii.LKR 25 and LKR 25 respectively iii.LKR 35 and LKR 40 respectively iv.LKR 15 and LKR 25 respectively

6. 6.Thunder Limited had inventory with a cost of LKR10, 000 at the end of the financial period, 31 December 2017. It estimated the net realizable value of this inventory was LKR9, 000 at 31 December. One week later, the inventory was sold for LKR7, 000. If their financial statements were finalized on 14 February 2018, what value should be assigned to this inventory? i.LKR 10,000 ii.LKR 9,000 iii.LKR 7,000 iv.None of these

7. 7. Which of the following cost models is not permitted under LKAS 2? i.First in, First out (‘FIFO’) ii.Last in, Last out (‘LIFO’) iii.Weighted Average iv.Actual cost

8. 8.Which of the following costs are not included while computing the cost of purchase? i.Purchase Price ii.Recoverable taxes iii.Import duties iv.Shipping costs

9. 9.How, unallocated overheads treated as per LKAS 2? i.Recognise as an expense so long as there is a profit in the current period ii.Recognise as an expense in the period in which they are incurred iii.Treated as deferred expenditure iv.Capitalised with the cost of inventories

10. 10.Zippy Machines is in the business of procuring a specific type of machine and sells them to international markets. During the year, the Company bought four machines costing LKR120,000, LKR140,000, LKR130,000 and LKR100,000 respectively. During the year it sold only one machine for LKR140,000 and follows the FIFO method of valuation. Which of the following statements is TRUE? i. The cost of Inventory is LKR370,000 and the cost of sales is LKR100,000 ii. The cost of Inventory is LKR390,000 and the cost of sales is LKR140,000 iii. The cost of Inventory is LKR370,000 and the cost of sales is LKR120,000 iv. The cost of Inventory is LKR370,000 and the cost of sales is LKR490,000

11. Q1) Harshan PLC had 50 000 units of product X which are fully completed and 10 000 of product Y which are party completed. Cost incurred for product X and Y were Rs. 350,000 and Rs.150,000 respectively. A completed unit of product X and Y are expected to be sold at Rs.60 and Rs.50 each respectively. However a cost of Rs.85,000 has to be incurred to complete the product Y. Further, 10% sales commission should be given to sales staff at the time of sale. Required: Calculate the NRV of the inventories

12. Q2) XYZPLC is a textile manufacturing company. Following information is relevant clothes and other raw materials imported during the March 2018. -Purchased price (Prior to the trade discount) – 1,000 meters LKR. 860 000 -Discount 5% -Freight and insurance LKR.150 000 -Import duties LKR.250 000 -Transport charges LKR. 25 000 During the period these materials were used to manufacture garments and normal losses incurred in the process was 10% of the input of material. The direct laboure cost and manufacturing overhead incurred were LKR.170 000 and LKR.180 000 respectively. Special design cost of LKR.60 000 was incurred for a special customer order which was manufactured using these materials. All item produced were available in the stores and storage cost was Rs.55 000. General administration expense of the March 2018 was LKR.75000. Required: Calculate the cost of closing inventory as at 31.03.2018

13. Q 03) Following information is relevant to product X purchased and sold by XYZ PLC during the November 2018 1.11 Balance of 3 000 units Purchased at LKR.10.50 each 5.11 Purchase of 1 500 units @ LKR 12 each 12.11 Sale of 1 650 units at LKR 20 each 18.11 Purchase of 1 100 units at LKR 15 each 20.11 Sale of 1 000 units at Rs.20 each 22.11 Sale of 450 units at LKR 21 each 25.11 Purchase of 850 units at LKR 20.50 each 31.11 Sale of 350 units Required: Cost of closing inventories under the FIFO and weighted average methods