Reference no: EM131626486

Question: (a) Outline a suitable system for collecting the material cost of each job in a manufacturing company employing historic job costing.

(b) Zeppo Ltd manufactures a range of products from one basic material. In September, the opening stock of the material was 650 kilos and. at the end of the month a physical count revealed a stock of 900 kilos. which was 250 kilos less than that shown by the inventory records. Except for the returns to the supplier shown below. all material recorded as being issued from store was consumed by production. The material costs £2 per kilo. At the beginning of September, the amount owing to creditors for supplies of this material was £3.800 and during the month Zeppo Ltd paid these creditors £7.200 and returned £600 of faulty material. At the end of the month the amount owing to the creditors concerned was £4.000. The company operates an historic batch costing system fully integrated with the financial accounts.

Required: (i) Calculate the value of material issued to production during September and record the month's transactions for the material in a stores account show ing both quantities and value. You should clearly indicate the account into which (or from which) the corresponding entry should be posted.

(ii) Briefly consider the possible reasons for the stock loss revealed by the physical count.