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Topic: Process Cost Accounting - FIFO Costing Method
Learning Objectives:
The learning objective of this Assignment No. 02 is to encourage the students for
applying their knowledge about FIFO costing, which they have learned during
lesson No. 01 to 27. This will enhance the understanding of the students about
FIFO costing method.
Learning Outcomes:
After solving this Assignment No. 02 the learners (students) are well aware about
the FIFO costing techniques used for calculating the closing WIP cost and the
finished goods inventory.
The Case
Science Developers – a lab instruments manufacturing and marketing company is working in far
flung hilly areas of world renowned Scientific Country. At present, the company is involved in
manufacturing and marketing of one of its famous chemical brand – Chemical. The Country’s
Government has recently given the company an order for delivering Chemical in 500,000 lbs.
The Company has started its work on the project on 1st February, 2012. The company has the
policy to cost material and units on the FIFO method.
On 30th April, 2012, Mr. Processor – In-charge of processing department, presented following
monthly report to Mr. Chief. This report contains information about inventories, costs and
production as under:
March 30 April 30
Materials 100,000 lbs 80,000 lbs
Materials cost Rs. 100,000 ----
Work In Process Inventories:
All Materials, 40% completed as to labor and FOH 20,000 units
Cost Rs. 84,000
All Materials, 331/3% completed as to labor & FOH 30,000 units
Finished goods inventory 40,000 units 24,000 units
Cost Rs. 448,000
Purchase of Materials 440,000 lbs @ Rs. 1.10 per lb
Transferred to production 460,000 lbs
Production ratio – 2 lbs: 1 of Chemical
Completed during the month 220,000 units
Direct Labor Rs. 1,198,800
Factory Overhead Rs. 421,800
Requirement:
Calculate the following: (6 marks each)
a) Equivalent production units of material, labor and FOH
b) Unit costs of three cost elements
c) Cost of units transferred to finish goods inventory, using FIFO costing method.
d) Cost of the ending Work in process inventory
e) Number of units sold and the cost of the finished goods inventory on April 30, 2012 using
the FIFO method.
Instructions:
Please read the following instructions carefully before preparing the assignment solution:
 All Supporting Formulas and calculations are required as they carry marks.


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Replies to This Discussion

thanks a lot .u solve our tension

Thanks for providing the idea solution this is great effort thanks from faisal

dear mujhe be complete sloution provide kr do i wait your message sweety

THANK You that so was very kind......I guess i just hate Accounting cx i cant understand a word any way m really grateful.....

but 460000lbs Jo transfer ho rhy hain production ko wo kahn gay aur jo production ratio 2 lbs :1 of chemical os ka kya bny ga.
Kashif bro

plz clear this point . 

o/p material which is100,000 lbs nd its cost is 100,000 . y u ignore it in ur calculataion to find material total cost?

yes i agree

@ Shumaila nisar


Opening Material 100000
Add Purchases 440,000 lbs @ Rs. 1.10 per lb ( 440000x1.1 = 484000)
LEss Closing = 80000

504000

100,000 ko ignore nahi kiya ..aap dekh sakti hain...

Mgt 402 2nd Assigenment 

Mgt402 Cost & Management Accounting
Assignment. No. 2
Mc080402527

Quanitity Schedule

Units from proceeding department (Opening W-I-P) 20,000
Units Started in Process 230,000
250,000
Units Completed & Transfer 220,000
Units in W-I-P 30,000
250,000

Cost to be Accounted Total Cost Total P.U.C
Opening W-I-P 84,000
Cost Added By Department
Material (460000 x 1.1) 506,000 2.024
Labor 1,198,800 4.953719008
FOH 421,800 1.742975207
2,210,600 8.720694

Total Per Units Completed & Transfer (220,000 x 8.720694) 1,918,552.73

Opening W-I-P Cost
Previous Cost 84000
Labor (20,000 x 60% x 4.9) 59444.628
FOH (20,000 x 60% x 1.74) 20915.7

Closing W-I-P Cost
Material (30,000 x 100% x 2.024) 60720
Labour (30,000 x 33.33% x 4.953719008) 49537.19
FOH (30,000 x 33.33% x 1.742975207) 17429.75

2,210,600.00


a) Equivalent Production Units of Material, Labor and FOH

Opening
Closing

Material 220,000 + (20,000 x 0%) 220,000 (30,000 x 100%) 30,000 250,000
Labor 220,000 + (20,000 x60%) 232,000 (30,000 x 33.33%) 10,000 242,000
FOH 220,000 + (20,000 x60%) 232,000 (30,000 x 33.33%) 10,000 242,00


b) Unit Costs of Three Cost Elements
Cost Unit Per Unit Cost
Material ( 460,000 x 1.10) 506,000 250,000 2.024
Labour 1,198,800 242,000 4.953719008
FOH 421,800 242,000 1.742975207
Total Per Unit Cost = 8.720694215



c) Cost of units transferred to finish good inventory, using FIFO costing method

Units Transfer 220,000 8.720694215
Total per unit cost (220,000 x 8.720694215) 1,918,552.73




d) cost of the ending work in process inventory
Material (30,000 x 100 % x 2.024) 60,720.00
Labor (30,000 x 33.33 % x 4.953719) 49,537.19
FOH (30,000 x 33.33 % x 1.742975) 17,429.75
e) Number of units sold and the cost of the finished goods inventory on April 30, 2012 using the FIFO method
Unit Sold
Reverse Calculation
Units Sold 236,000
Add Opening 40,000
Less Closing -24,000
Units Produced 220,000

Cost of Finish Good Inventory
Finish goods inventory (24,000x8.720694) 209,296.656

MGT402 Assignment#02 Complete Solution 

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