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Topic to be tested:

  • Costing in manufacturing business and valuation of stock


Learning Objectives:

  • To understand the concepts used in the preparation of cost of goods sold statement and valuation of stock



Home Comforts is dealing in the manufacturing of wood products since last two decade in more than 5 cities of Pakistan. The company uses First in First out (FIFO) method for costing its raw materials. On 1st January 2015, the stocks of raw material, work in process and finished goods were Rs. 20,000, Rs. 8,000 and Rs. 3,000 respectively. During the year, material was purchased on 10th January and 15thJuly at Rs. 100,000 and Rs. 60,000 respectively with total freight inward of Rs. 1,000. Direct Labor cost was Rs. 50,000 and marketing manager salary was of Rs. 70,000 while conversion cost was recorded as Rs. 80,000.

At the year end, no inventories were found in hand except work in process which was twice of the balance as on 31st December 2014.



  1. Calculate the following:
    1. Cost of material consumed
    2. Total factory cost
    3. Factory overhead cost
  2. Describe the impact on total factory cost determined by the Home Comforts if we use Last in First out (LIFO) method.

Views: 3456

Replies to This Discussion

anyone solve this..???

How to proceed with part two, i am slightly confused since units are not given to valuate the inventory on LIFO, please any suggesation....:)

Dears, anybody attepmted this GDB? kindly advise. thanks 

isko fifo method se solve kren gy kia..????

kn sy lectr m say h yyy...

1st part ko fifo method say solve karna hai .....aur second part mein describe karna hai k agr fifo k bajaye lifo method use kiya jaye to phr kya impact ho ga total factory cost par.

yar solution dikha do please....

Hi Zahid,
Thanks for explaining but how we can describe part 2, any idea.

see chapter # 15

and 16


Opening RAW MATERIAL  20000

- closing raw material        0

+ PURCHASE               100000

+ PURCHASES              60000

+ FRIGHT                       1000

Cost of material consumed 181000


DIRECT material            181000

+ DIRECT Labour             50000                           OR  181000+  80000= 261000

+ FACTORY OVERHEAD       30,000                    FOH =    80,000-50000=30,000

    FACTORY COST           261,000


                                      =  80,000 - 50,000 

                                     = 30,000

1st part mein closing stock ko sub say akhir mein minus kartay hain

thanks Gladiator...


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