Question

Cost Accounting | Accounting For Materials | Materials Costing Method (PERPETUAL SYSTEM)!

The following information is to be used in costing inventory on February 28: February 1- Beginning balance 5,800 units at $60 per unit. February 5 - Issued 1,800 units to production February 8 - Purchased 3,000 units at $70 per unit. February 9 - Issued 2,000 units . • February 12 - Purchased 1,500 units at $75 per unit. February 18 - Issued to production 4,000 units. February 25 - Purchased 3,000 units at $80 per unit. February 28 - Issued to production 3,500 units. Required (Prepare Table): Assume the perpetual inventory system. Determine the cost of materials used and the cost assigned to the February 28 inventory of materials using each of the following methods of costing. 1. Average Cost 2. Fifo Cost WAN

Answer 1

a.

Average Method Date Purchases Cost of Goods Sold Ending Inventory Qty Unit $ Total $ Qty Unit $ Total $ Qty Unit $ Total $ February 1 $5,800.00 $60.00 $348,000.00 February 5 $1,800.00 $60.00 $108,000.00 $4,000.00 $60.00 $240,000.00 February 8 $3,000.00 $70.00 $210,000.00 $7,000.00 $64.29 $450,000.00 February 9 $2,000.00 $64.29 $128,571.43 $5,000.00 $64.29 $321,428.57 February 12 $1,500.00 $75.00 $112,500.00 $6,500.00 $66.76 $433,928.57 February 18 $4,000.00 $66.76 $267,032.97 $2,500.00 $66.76 $166,895.60 February 25 $3,000.00 $80.00 $240,000.00 $5,500.00 $73.98 $406,895.60 February 28 $3,500.00 $73.98 $258,933.57 $2,000.00 $73.98 $147,962.04 Total $11,300.00 $762,537.96 $2,000.00 $147,962.04

b.

FIFO Method Date Purchases Cost of Goods Sold Ending Inventory Qty Unit $ Total $ Qty Unit $ Total $ Qty Unit $ Total $ February 1 5800 $60 $348,000 February 5 1800 $60 $108,000 4000 $60 $240,000 February 8 3000 $70 $210,000 4000 $60 $240,000 3000 $70 $210,000 February 9 2000 $60 $120,000 2000 $60 $120,000 3000 $70 $210,000 February 12 1500 $75 $112,500 2000 $60 $120,000 3000 $70 $210,000 1500 $75 $112,500 February 18 2000 $60 $120,000 1000 $70 $70,000 2000 $70 $140,000 1500 $75 $112,500 February 25 3000 $80 $240,000 1000 $70 $70,000 1500 $75 $112,500 3000 $80 $240,000 February 28 1000 $70 $70,000 2000 $80 $160,000 1500 $75 $112,500 1000 $80 $80,000 Total 11300 $750,500 2000 $160,000

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