Question

Inventory costing methods.

Chicago Clay, Inc. makes the following purchases and issues of a new material during March:

March     2    Received 200 lbs. @ $9; total cost, $1,800.

              8    Received 60 lbs. @ $10; total cost, $600.

            18    Issued 100 lbs.

            24    Received 240 lbs. @ $12; total cost, $2,880.

            31    Issued 200 lbs.

Instructions: Using a perpetual inventory system and the materials ledger cards provided, state the cost of materials consumed and the cost assigned to the inventory at the end of March.

a.   First-in, first-out costing

	Received			Issued			Balance
Date	Quantity	Unit Price	Amount	Quantity	Unit Price	Amount	Quantity	Unit Price	Amount

Cost of materials consumed.......................     $_______________

Cost assigned to inventory.........................     $_______________

b. Last-in, first-out costing

	Received			Issued			Balance
Date	Quantity	Unit Price	Amount	Quantity	Unit Price	Amount	Quantity	Unit Price	Amount

Cost of materials consumed.......................     $_______________

Cost assigned to inventory.........................     $_______________

Answer 1

a. First-in, first-out costing Received Date Quantity Unit Price Amount March.2 2001 $ 9 $ 1,800 March.8 600 $ 10$ 600 March.18 Issued Balance Quantity Unit Price Amount Quantity Unit Price Amount 2001 $ 9 $1,800 200 $ 9 $1,800 600 $ 10 $ 600 100 $ 9$ 900 1000 $ 9 $ 900 60 $ 10 $ 600 1000 $ 9 $ 900 600 $ 10$ 600 2400 $ 12 $2,880 100 $ 9 $ 900 2000 $ 12 $2,400 600 $ 10 $ 600 40 $ 12 $ 480 March.24 2400 $ 12$ 2,880 March.31 Cost of materials Consumed ($900+$900+$600+$480) = $2,880 Cost assigned to inventory = $2,400

b. Last-in, first-out costing Received Date Quantity Unit Price Amount March.2 2000 $ 9 $ 1,800 March.8 600 $ 10 $ 600 March.18 Issued Balance Quantity Unit Price Amount Quantity Unit Price Amount 200 $ 9 $1,800 200 $ 9 $1,800 60 $ 10 $ 600 600 $ 10 $ 600 1600 $ 9 $1,440 401 $ 9 $360 1600 $ 9 $1,440 240 $ 12 $2,880 200 $ 12 $2,400 1600 $ 9 $1,440 40 $ 12 $ 480 March.24 2400 $ 12 $ 2,880 March.31 Cost of materials Consumed ($600+$360+$2,400) = $3,360 Cost assigned to inventory ($1,440+$480) = $1,920