Cost information of the Alpha Pvt Ltd. show the following purchases and issues of materials during October: October 1. Beginning Balance: 2800 units @ Rs. 12.00 per unit. 4. Issued 1200 units. 6. Received 1000 units @ Rs.13.30 per unit. 8. Issued 1000 units. 14. Received 400 units @ Rs.14.00 per unit. 17. Issued 800 units. 20. Received 500 units @ Rs.14.16 per unit. 25. Issued 900 units. 27. Received 1200 units @ Rs.13.00 per unit. Required: 1. The cost of material consumed and the cost assigned to the inventory at the end of the month, using FIFO Method. Which industry uses FIFO method and Why? 2. The cost of material consumed and the cost assigned to the inventory at the end of the month, using Average Cost Method. Which industry uses average cost method and Why? 3. The cost of material consumed and the cost assigned to the inventory at the end of the month, using LIFO Method
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Cost information of the Alpha Pvt Ltd. show the following purchases and issues of materials
during October:
October 1. Beginning Balance: 2800 units @ Rs. 12.00 per unit.
4. Issued 1200 units.
6. Received 1000 units @ Rs.13.30 per unit.
8. Issued 1000 units.
14. Received 400 units @ Rs.14.00 per unit.
17. Issued 800 units.
20. Received 500 units @ Rs.14.16 per unit.
25. Issued 900 units.
27. Received 1200 units @ Rs.13.00 per unit.
Required:
1. The cost of material consumed and the cost assigned to the inventory at the end of
the month, using FIFO Method. Which industry uses FIFO method and Why?
2. The cost of material consumed and the cost assigned to the inventory at the end of
the month, using Average Cost Method. Which industry uses average cost method and
Why?
3. The cost of material consumed and the cost assigned to the inventory at the end of
the month, using LIFO Method
4. The comparative statement showing the effect of each method on gross profit?
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