Inventory Valuations _ Five questions

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Description

Read Chapter 8 – Accounting for Inventory

Use
the following information for Questions 8.1 & 8.2

Premium Products purchases inventory during
the month of April as follows:

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On
25th April, 3,000 units are sold.

8.1 Using the information provided above,
calculate the cost of sales and inventory value using the weighted average
method.

8.2 Using the information provided above,
calculate the cost of sales and inventory value using the FIFO method.

8.3 The Big Table Co. Produced a batch of 20
tables during June on Job 2487. The following materials were issued to Job
2487:

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20 hours of labour
were charged to the job. The labour cost is £20 per hour. Overhead is charged
to jobs on the basis of £20 per labour hour.

After Job 2487 was
completed and placed into finished goods inventory, 15 tables were sold at a
unit price of £450.

Calculate:

·
The total job cost and the cost per table

·
The cost of sales

·
The value of inventory

·
The gross profit for the tables that were sold

8.4 The Massive Mining Co refines iron ore for
export markets. The following data relates to the company’s mine for the month
of April:

25,000 units of work in process existed at 1st April, the
costs for which were:

Direct materials

£18,500

Conversion

£36,750

35,000 units commenced production during April. The costs incurred
during the month for refining were:

Direct material

£300,000

Conversion

£230,000

The closing work in progress at 30th April was 15000 units.
Materials were added at the beginning of the refining process and conversion
was 1/3rd complete at month end.

  1. Calculate the cost per equivalent unit
    for the month of April using the weighted average method of process
    costing.
  2. Calculate the value of work in progress and
    the value of completed stock transferred to finished goods during the
    month

8.5 The Gargantuan Company has the following
transactions during December. Prepare a combined cost of goods sold and Income
Statement showing all these transactions and identify the value of inventory to
be included in the Balance Sheet at the end of December.

Inventory 1
December

120,000

Rental

30,000

Salaries &
Wages

45,000

Sales

435,000

Depreciation

12,000

Inventory 31
December

150,000

Marketing expenses

15,000

Gross profit

165,000

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