Assignment Number 3

Name:
WARDA IQBAL
Roll No:
BBA 07183048
CLASS:
BBA 4
Submit to:
Mam Fatima Sultana

Due Date:
03.06.2020
Subject:
Cost accounting

The University of Lahore |Sargodha Campus

Balance 1500 units @ Rs. 7.00
Received  750 units @ Rs. 6.25
Issued 625 units
Received 550 units @ 5.75
Issued 400 units
Direct labor is Rs.15, 000 and factory overhead cost is applied at the rate of xx% of the direct
labor cost. The units of the product manufactured are 1xx0, out of which 750 units were sold at a
unit price of Rs. 27. There were no beginning inventories of work in process and finished goods,
and no work was left in process at the end of the month. Marketing and administration expenses
for the month totaled Rs. 560 and Rs.750 respectively.

Note: xx denotes your registration number.

            Required:

(1)   Prepare material ledger cards under LIFO, FIFO and Average Cost Method (ACM).

(2)   Calculate cost of goods sold and cost of closing finished goods inventory under LIFO, FIFO
and ACM.

(3)   Prepare income statement for the month under each of the above mentioned methods.

Solution

FIFO method
Purchases (+) issues (-) Balance

Units $units $total Units $units $total Units $units $total

1500 7 10500

750 6.25 4687.5 1500 7 10500

750 6.25 4687.5

625 7 4375 875 7 6125

750 6.25 4687.5

550 5.75 3162.5 550 5.75 3162.5

400 7 2800 475 7 3325

750 6.25 4687.5

550 5.75 3162.5

Total= Total= Total=

7850 7175 11175

Cost of direct material

Beginning raw material inventory 10,500

(+) purchases of raw material 7850

Cost of raw material available for use 18350

(-)ending of raw material inventory 11175

Cost of direct material 7175

Cost of goods manufacturing statement

Direct material use in production 7175

Direct labor 15000

Factory overhead cost 7200

Total manufacturing cost 29375

 (+)beginning goods inventory _

Total cost of goods in process 29375

(-) ending goods inventory _

29375

Cost of goods sold statement

Cost of goods manufactured 29375

Finished goods _

Cost of goods available for sale 29375

(-)finished goods inventory 19710

Cost of goods sold 9665

Income statement

Sales 20250

(-)Cost of goods sold 9665

Gross profit 10585

(-)Operating expense 1310

Income before tax 9275

Tax _

Net income 9275

LIFO

Purchases (+) issues (-) Balance

Units $units $total Units $units $total Units $units $total

1500 7 10500

750 6.25 4687.5 1500 7 10500

 750 6.25 4687.5

625 6.25 3906.25 1500 7 10500

125 6.25 781.25

550 5.75 3162.5 550 5.75 3162.5

400 5.75 2300 1500 7 10500

125 6.25 781.25

150 5.75 862.5

Total= Total= Total=

7850 6206.25 12144

Cost of direct material

Beginning raw material inventory 10,500

(+) purchases of raw material 7850

Cost of raw material available for use 18350

(-)ending of raw material inventory 12144

Cost of direct material 6206

Cost of goods manufacturing statement

Direct material use in production 6206

Direct labor 15000

Factory overhead cost 7200

Total manufacturing cost 28406

(+)beginning goods inventory _

Total cost of goods in process 28406

(-) ending goods inventory _

28406
 Cost of goods sold statement

Cost of goods manufactured 28406

Finished goods _

Cost of goods available for sale 28406

(-)finished goods inventory 19710

Cost of goods sold 8696

Income statement

Sales 20250

(-)Cost of goods sold 8696

Gross profit 11554

(-)Operating expense 1310

Income before tax 10244

Tax _

Net income 10244

AVCO method

Purchases (+) issues (-) Balance

Units $units $total Units $units $total Units $units $total

1500 7 10500

750 6.25 4687.5 1500 7 10500

750 6.25 4687.5

2250 6.75 1518.75

625 6.75 4218.8 1625 6.75 10968.8

1625 6.75 10968.8

550 5.75 3162.5 550 5.75 3162.5

 400 6.5 2600 2175 6.5 14131.3

1775 6.5 11537.5

7850 6818.8 11538

Cost of direct material

Beginning raw material inventory 10,500

(+) purchases of raw material 7850

Cost of raw material available for use 18350

(-)ending of raw material inventory 11538

Cost of direct material 6812

Cost of goods manufacturing statement

Direct material use in production 6812

Direct labor 15000

Factory overhead cost 7200

Total manufacturing cost 29012

(+)beginning goods inventory _

Total cost of goods in process 29012

(-) ending goods inventory _

Cost of goods manufactured 29012

Cost of goods sold statement

Cost of goods manufactured 29012

Finished goods _

Cost of goods available for sale 29012

(-)finished goods inventory 19710

Cost of goods sold 9302

Income statement
 Sales 20250

(-)Cost of goods sold 9302

Gross profit 10948

(-)Operating expense 1310

Income before tax 9638

Tax _

Net income 9638