COST ACCOUNTING

Costing Methods
Cenelyn E. Pajarilla BSA2

1. FIFO COST METHOD

MATERIALS LEDGER CARD
(FIFO Cost Method)
MATERIAL Plywood
NUMBER B-84
RECEIVED
DATE REF. UNITS PRICE AMOUNT
Nov 1 Bal
R71
3 PO-42 650 88 57,200

7 R74

12 R76
21 R79
26 PO-47 650 85 55,250
30 R82

MATERIALS LEDGER CARD

(FIFO Cost Method)
MATERIAL Plastic
NUMBER R-36
RECEIVED
DATE REF. UNITS PRICE AMOUNT
Nov 1 Bal
3 PO-42 650 76 49,400
4 R73

7 R74
12 R76
26 PO-47 650 79 51,350
30 R82
LS LEDGER CARD
Cost Method)
REORDER POINT 300
REORDER QUANTITY 650
ISSUED BALANCE
UNITS PRICE AMOUNT UNITS PRICE AMOUNT
271 95 25,745
135 95 12,825 136 95 12,920
136 95 12,920
650 88 70,120
136 95 12,920
29 88 2,552 621 88 54,648
80 88 7,040 541 88 47,608
304 88 26,752 237 88 20,856
650 85 76,106
210 88 18,480 27 88 2,376
650 85 55,250
57,626

LS LEDGER CARD

REORDER POINT 300

REORDER QUANTITY 650
ISSUED BALANCE
UNITS PRICE AMOUNT UNITS PRICE AMOUNT
83 70 5,810
733 76 55,210
83 70 5,810
52 76 3,952 598 76 45,448
165 76 12,540 433 76 32,908
80 76 6,080 353 76 26,828
650 79 78,178
353 76 26,828
30 79 2,370 620 79 48,980
2. MOVING AVERAGE METHOD
MATERIALS LEDGER CARD
(MOVING AVERAGE METHOD)
MATERIAL Plywood
NUMBER B-84
RECEIVED ISSUED
DATE REF. UNITS PRICE AMOUNT UNITS PRICE
Nov 1 Bal
R71 135 95
3 PO-42 650 88 57,200
7 R74 165 89.2
12 R76 80 89.2
21 R79 304 89.2
26 PO-47 650 85 55,250
30 R82 210 86.1

MATERIALS LEDGER CARD

(MOVING AVERAGE METHOD)
MATERIAL Plastic
NUMBER R-36
RECEIVED ISSUED
DATE REF. UNITS PRICE AMOUNT UNITS PRICE
Nov 1 Bal.
3 PO-42 650 76 49,400
4 R73 135 75.321
7 R74 165 75.321
12 R76 80 75.321
26 PO-47 650 79 51,350
30 R82 383 77.051
 REORDER POINT 300
REORDER QUANTITY 650
SSUED BALANCE
AMOUNT UNITS PRICE AMOUNT
271 95 25,745
12,825 136 95 12,920
786 89.2 70,120
14,718.00 621 89.2 55,402.00
7,136 541 89.2 48,266.00
27,117 237 89.2 21,149.00
887 86.1 76,399.00
18,081.00 677 86.1 58,318.00

REORDER POINT 300

REORDER QUANTITY 650
SSUED BALANCE
AMOUNT UNITS PRICE AMOUNT
83 70 5,810
733 75.321 55,210
10,168.34 598 75.321 45,041.96
12,427.97 433 75.321 32,613.99
6,025.68 353 75.321 26,588.31
1,003 77.051 77,938.31
29,511 620 77.051 47,771.62
COST ACCOUNTING
COSTING METHODS
CENELYN E. PAJARILLA BSA2
1.
Material
AB
Total
Purchase 44,000
s units
15,000
Units left On Hand
units
29,000
Total Units Issued
units

Using the FIFO Method

Date Units Unit Cost Amount
January 5,000 40 200,000

April 12,000 45 540,000

Novembe
r 12,000 50 600,000
29,000
units
FIFO Inventory Dec. 31, 2013

Novembe
r 5,000 50 250,000
Decembe
r 10,000 60 600,000
15,000 850,000

Total FIFO Inventory December 31, 2013

Material
AB 15,000 850,000
Material
XY 14,500 362,500
29,500 1,212,500

2.
Material
AB
Total
Purchase
s 35,000
Units left on Hand 16,000
Total Units Issued 19,000

Using FIFO Method

Date Units Unit Cost Amount
February 3,000 70 210,000

May 12,000 75 900,000

 October 4,000 80 320,000
19,000
units

FIFO Inventory Dec. 31,2014

October 16,000 80 1,280,000

Total FIFO Inventory December 31, 2014

Material
AB 16,000 1,280,000
Material
XY 20,000 700,000
36,000 1,980,000

3
Material
AB
2014 Units Unit Cost Amount
Beg. bal 15,000 850,000
February 3,000 70 210,000

May 12,000 75 900,000

October 20,000 80 1,600,000
50,000 3,560,000

3,560,000/50,000=71.2 x 16,000 = 1,139,200

2,480,000/80,000=31 x 20,000 = 620,000

1,139,200 + 620,000 = 1,759,200

*net income will decrease since the ending inventory under average m
Material
XY
Total
Purchase
s 40,500
Units left on hand
14,500
Total Units Issued
26,000

Using the FIFO Method

Date Units Unit Cost Amount
January 22,000 20 440,000
Novembe
r 4,000 25 100,000

26,000

FIFO Inventory Dec. 31,2013

Novembe
r 14,500 25 362,500

Material
XY
Total
Purchase
s 65,500
Units left on Hand 20,000
Total Units Issued 45,500

Using FIFO Method

Date Units Unit Cost Amount
February 35,000 30 1,050,000
Decembe
r 10,500 35 367,500
 45,500
units

FIFO Inventory Dec. 31, 2014

Decembe
r 20,000 35 700,000

Material
XY
2014 Units Unit Cost Amount
Beg. bal 14,500 362,500
Februay 35,000 30 1,050,000
Decembe
r 30,500 35 1,067,500
80,000 2,480,000

0 = 1,139,200

ng inventory under average method is smaller than in FIFO.

COST ACCOUNTING
COSTING METHODS
CENELYN E. PAJARILLA BSA2

Identify the costing method used in preparing the two schedules of gross income.

Schedule Schedule
1 2
COGS = 1,169,000 COGS = 1,157,500
Units sold = 28,000 (2,800,000/100) Units Sold = 28,000

Units Unit Cost Total Cost

1,753,500/42,000=41.75 (unit cost) 10,000 40 400,000
28,000 x 41.75 = 1,169,000 8,000 42 336,000
Moving average was used. 5,000 41.3 206,500
5,000 43 215,000
1,157,500

FIFO method was used.

COST ACCOUNTING
COSTING METHODS
CENELYN E. PAJARILLA
Lower of
Valuation cost or
Units Unit Cost NRV Basis NRV
Materials:
R-10 1,000 110 100 NRV 100,000
S-11 2,000 250 260 COST 500,000
T-12 3,000 300 330 COST 900,000
Goods in
Process:
X-20 4,000 500 480 NRV 1,920,000
Y-21 5,000 650 620 NRV 3,100,000
Finished
Goods:
A-30 2,000 800 790 NRV 1,580,000
B-31 2,000 730 780 COST 1,460,000

Inventory
Valuation 9560000