Question

1. Cost of Materials Issuances Under the FIFO Method

   An incomplete subsidiary ledger of materials inventory for May is as follows:

   a. Complete the materials issuances and balances for the materials subsidiary ledger under FIFO.

   Received				Issued				Balance
   Receiving Report Number	Quantity	Unit Price		Materials Requisition Number	Quantity	Amount		Date	Quantity	Unit price	Amount
   								May 1	210	$5	$1,050
   27	150	$7						May 4
   				102	240	$		May 10
   33	100	9						May 21
   				115	140			May 27

   b. Determine the materials inventory balance at the end of May.
   $

   c. Journalize the summary entry to transfer materials to work in process.

   d. Comparing _________ as reported in the materials ledger with predetermined order points would enable management to order materials before a(n) _______ causes idle time

Answer 1

a. Complete the materials issuances and balances for the materials subsidiary ledger under FIFO.
Received				Issued				Balance
Receiving	Quantity	Unit		Materials	Quantity	Amount		Date	Quantity	Unit	Amount
Report		Price		Requisition						price
Number				Number
								May-01	210	$ 5	$ 1,050
27	150	$ 7						May-04	210	$ 5	$ 1,050
									150	$ 7	$ 1,050
				102	240	$ 1,260		May-10	120	$ 7	$ 840
33	100	9						May-21	120	$ 7	$ 840
									100	$ 9	$ 900
				115	140	$ 1,020		May-27	80	$ 9	$ 720

Computation of "amount" for an issue of 240 units
Quantity	Unit Price	Amount (Quantity *Unit Price)
210	$ 5	$ 1,050
30	$ 7	$ 210
Total		$ 1,260

Computation of "amount" for an issue of 140 units
Quantity	Unit Price	Amount (Quantity *Unit Price)
120	$ 7	$ 840
20	$ 9	$ 180
Total		$ 1,020

b. Determine the materials inventory balance at the end of May.

$ 720

c. Journalize the summary entry to transfer materials to work in process.
Date	Accounts title and explanation			Debit	Credit
May-31	Work in progress inventory			$ 2,280
	Raw Material inventory				$ 2,280
Being record of transfer of materials to work in progress (1260+1020)

d. Comparing _________ as reported in the materials ledger with predetermined order points would enable management to order materials before a(n) _______ causes idle time.
									Comparing Quantities on hand (or) ending inventory balance as reported in the materials ledger with predetermined order points would enable management to order materials before a(n) lack of materials (or) Unavailability of inventory causes idle time.