Question

Problems (4.1A) Use different inventory costing methods. (Objs. 1-3). The Allegheny Manufacturing Company uses a perpetual inventory system to control materials. Data relating to Material S-8 during January 2006 are given below. Jan. 1 Balance, 150 units at $4.00 each. 6 Received 200 units at $4.05 each, Purchase Order 74. 12 Issued 225 units, Requisition 18. 14 Received 250 units at $4.10 each, Purchase Order 83. 17 Issued 200 units, Requisition 23. 31 Issued 40 units, Requisition 29. Instructions Enter the beginning balance on a materials ledger card for each of the three inventory valuation methods: FIFO, LIFO, and moving average. Record each of the transactions on each of the materials ledger cards. Round unit costs to the nearest cent under the moving average costing method.

Answer 1

Under First in First out method, inventory is issued from the units which are received first.

Under Last in First out method, inventory is issued from the units which are received last.

Under moving average method, inventory is issed at average of units in stock.

1. FIFO Method Date Purchases Cost of Goods sold Ending Inventory Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost A B A B A B A*B A B A*B Jan-01 150 4.00 $ 600 1501 4.00 $ 600 Jan-06 2001 4.05 $ 810 200 4.05 $ 810 Jan-12 150 4.00 $ 600 75 4.05$ 304 125 4.05$ 506 Jan-14 250 4.10 $ 1,025 125 4.05$ 506 250 4.10 $ 1,025 Jan-17 125 4.05 $ 506 75 4.10 $ 308 175 4.10 $ 718 Jan-31 40 4.10 $ 164 135 4.10 $ 554 $ 465 $ 1,882 135 $ 554 2. LIFO Method Date Purchases Cost of Goods sold Ending Inventory Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost A B A*B A B A*B A B A*B Jan-01 150 4.00 $ 600 150 4.00 $ 600 Jan-06 200 4.05$ 810 200 4.05 $ 810 Jan-12 4.05$ 810 125 4.00 $ 500 25 4.00 $ 100 Jan-14 4.10 $ 1,025 125 4.00 $ 500 250 4.10 $ Jan-17 200 4.10 $ 820 125 4.00 S 500 50 4.10 $ 205 Jan-31 40 4.10 $ 164 125 4.00 $ 500 A 10 4.10 $ 41 B $ 465 $ 1,894 135 $ 541 A+B 200 250 1,025 3. Moving Average Method Date Purchases Cost of Goods sold Ending Inventory Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost IA B A*B A B A*B A B A*B Jan-01 150 4.00 $ 600 Jan-06 200 4.05$ 810 150 4.00 $ 600 200 4.05$ 810 350 4.03 $ 1,410 1,410/350=4.03 Jan-12 225 4.03 $ 907 125 4.03 S 504 Jan-14 250 4.10 $ 1,025 125 4.03 $ 504 250 4.10 $ 1,025 375 4.08 $ 1,529 1,529/375=4.08 Jan-17 200 4.08 $ 815 175 4.08 $ 713 Jan-31 40 4.08 $ 163 135 4.08 $ 550 $ $ 1,885 135 $ 550 465