Question

Cost Accounting | Accounting For Materials | Materials costing Method (PERIODIC INVENTORY SYSTEM)

The following information is to be used in costing inventory on September 31: September 1- Beginning balance 6,000 units at P60 per unit. September 4 - Purchased 4,700 units at P70 per unit. September 7-Issued 3,800 units to production September 10 - Issued 2,900 units September 13 - Purchased 6,500 units at P75 per unit. September 17 - Issued to production 5,000 units. September 19 - Materials returned to storeroom from September 17 issuance 1,800 units September 24 - Purchased 4,000 units at P80 per unit. September 25 - Issued to production 4,500 units. Required: A. Assuming, they use the periodic inventory system. Determine the cost of materials used and the cost assigned to the September 31 inventory of materials using each of the following methods of costing. 1. FIFO 2. Average Cost

Answer 1

Answer: FIFO method Purchases Cost of Material Used Inventory Date Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Sep 1 6000 60 360000 Sep 4 4700 70 329000 6000 4700 60 70 360000 329000 Sep 7 3800 60 228000 2200 4700 60 70 132000 329000 Sep 10 2200 700 60 70 132000 49000 4000 70 280000 Sep 13 6500 75 487500 4000 70 280000 487500 6500 75 Sep 17 4000 70 75 280000 75000 1000 5500 75 412500 Sep 19 1800 70 126000 5500 1800 75 70 412500 126000 Sep 24 4000 80 320000 75 5500 1800 4000 70 412500 126000 320000 80 Sep 25 4500 75 337500 1000 1800 4000 6800 75 70 80 75000 126000 320000 521000 Total 16200 1101500 Total Cost of Material Used = 16200 units for P1101500 Ending Inventory = 6800 units @ 521000 2) Average Cost Method Date Sep 1 Purchases Cost of Material Used Inventory Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost 6000 60 360000 Sep 4 4700 70 329000 60 360000 6000 4700 329000 70 64.39 10700 689000 Sep 7 3800 64.39 244682 6900 64.39 444291 Sep 10 2900 64.39 186731 4000 64.39 257560 Sep 13 6500 75 487500 4000 6500 10500 64.39 75 70.96 257560 487500 745060 Sep 17 5000 70.96 354800 5500 70.96 390280 Sep 19 1800 70.96 127728 7300 70.96 518008 Sep 24 4000 80 320000 70.96 7300 4000 11300 80 518008 320000 838008 74.16 74.16 333720 6800 74.16 Sep 25 Total 4500 16200 504288 504288 1119933 6800 Total Cost of Material Used = 16200 units for P 1119933 P Ending Inventory = 6800 units @ 504288 Please Give me Positive Vote Let me know if you need any further Information regarding question.