FIFO Method – NBC Institute

FA – May 2021 – L1 – SB – Q6b – Accounting for Inventories in Accordance with IAS 2

Calculate the cost of plastic buckets sold during the period using the First-in-First-Out (FIFO) method.

Question

Jayek Limited is a manufacturer of plastic buckets. On 1 January 2018, Jayek Limited held 15,000 plastic buckets at ₦11,865,000. During the year ended 31 December 2018, Jayek Limited produced 120,000 plastic buckets, compared to a normal production level of 150,000 plastic buckets. 12,000 plastic buckets’ inventories were held at 31 December 2018.

Production costs for the year were as follows:

Description	Amount (₦)
Raw Materials	42,000
Direct Labour	2,000
Variable Overheads	14,040
Fixed Overheads	25,950

At the reporting date, the net realizable value of the plastic buckets was higher than the cost.

Required: Using the First-in-First-Out (FIFO) method within the context of IAS 2 (Inventories), calculate the cost of plastic buckets sold during the period.

Answer

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Tags: Cost of Goods Sold, FIFO Method, IAS 2, Inventory Valuation
Level: Level 1

Series: MAY 2021

IMAC – DEC 2022 – L1 – Q4 – Accounting for Inventory and Labour

Explanation of inventory discrepancies, preparation of a FIFO inventory statement, sources of management information, and explanation of an investment center.

Question

a) Inventory refers to the goods and materials that a business holds for the ultimate goal of resale, production, or utilization in the near future. Inventory could be in the form of raw materials, finished goods, work in progress, among others.

Required:
Identify FIVE (5) reasons actual inventory counted may be different from the balance in the inventory records. (5 marks)

Answer

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Tags: FIFO Method, Inventory Discrepancies, Investment Center, Sources of Information
Level: Level 1

Topic: Accounting for Inventory and Labour
Series: DEC 2022

IMAC – MAY 2020 – L1 – Q4 – Accounting for Inventory and Labour | Standard Costing and Variance Analysis

Compare FIFO and weighted average inventory valuation, compute profit, and explain standard costing concepts.

Question

a) Grains Dealers Ltd is in the business of buying farm produce in bulk from out-growers for onward sale to manufacturers. In view of the huge volumes of receipt and sale transactions, the company is unable to use the specific pricing method for valuing inventories. The company needs advice on the impact on profit of using the FIFO or Weighted Average methods of inventory valuation. The following data has been extracted for the month of October 2019 for use:

Inventory balance as at 01/10/19 was 800 units at GH¢4 per unit.

Date	Purchases	Sales
	Quantity	Price (GH¢)
05/10/2019	1,200	5.00
10/10/2019
12/10/2019	1,500	6.00
15/10/2019	1,800	7.25
18/10/2019
25/10/2019	2,400	8.00
28/10/2019

Additional information:
A physical inventory count on 31 October 2019 revealed a shortage of 200 units.

Required:
i) Prepare the inventory ledger showing the value of costs of inventory sold, and the closing inventory on the basis of the perpetual inventory valuation system under:

FIFO Method (6 marks)
Weighted Average Method (6 marks)

ii) Compute the profit for the month for each method in columnar form. (3 marks)

b) Explain the following as used in standard costing and variance analysis:
i) Ideal standard;
ii) Attainable standard; (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: FIFO Method, Inventory Valuation, Standard Costing, Weighted Average Method
Level: Level 1

Topic: Accounting for Inventory and Labour, Standard Costing and Variance Analysis
Series: MAY 2020

FA – May 2021 – L1 – SB – Q6b – Accounting for Inventories in Accordance with IAS 2

Calculate the cost of plastic buckets sold during the period using the First-in-First-Out (FIFO) method.

Question

Production costs for the year were as follows:

Description	Amount (₦)
Raw Materials	42,000
Direct Labour	2,000
Variable Overheads	14,040
Fixed Overheads	25,950

At the reporting date, the net realizable value of the plastic buckets was higher than the cost.

Required: Using the First-in-First-Out (FIFO) method within the context of IAS 2 (Inventories), calculate the cost of plastic buckets sold during the period.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost of Goods Sold, FIFO Method, IAS 2, Inventory Valuation
Level: Level 1

Series: MAY 2021

IMAC – DEC 2022 – L1 – Q4 – Accounting for Inventory and Labour

Explanation of inventory discrepancies, preparation of a FIFO inventory statement, sources of management information, and explanation of an investment center.

Question

Required:
Identify FIVE (5) reasons actual inventory counted may be different from the balance in the inventory records. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: FIFO Method, Inventory Discrepancies, Investment Center, Sources of Information
Level: Level 1

Topic: Accounting for Inventory and Labour
Series: DEC 2022

IMAC – MAY 2020 – L1 – Q4 – Accounting for Inventory and Labour | Standard Costing and Variance Analysis

Compare FIFO and weighted average inventory valuation, compute profit, and explain standard costing concepts.

Question

Inventory balance as at 01/10/19 was 800 units at GH¢4 per unit.

Date	Purchases	Sales
	Quantity	Price (GH¢)
05/10/2019	1,200	5.00
10/10/2019
12/10/2019	1,500	6.00
15/10/2019	1,800	7.25
18/10/2019
25/10/2019	2,400	8.00
28/10/2019

Additional information:
A physical inventory count on 31 October 2019 revealed a shortage of 200 units.

Required:
i) Prepare the inventory ledger showing the value of costs of inventory sold, and the closing inventory on the basis of the perpetual inventory valuation system under:

FIFO Method (6 marks)
Weighted Average Method (6 marks)

ii) Compute the profit for the month for each method in columnar form. (3 marks)

b) Explain the following as used in standard costing and variance analysis:
i) Ideal standard;
ii) Attainable standard; (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: FIFO Method, Inventory Valuation, Standard Costing, Weighted Average Method
Level: Level 1

Topic: Accounting for Inventory and Labour, Standard Costing and Variance Analysis
Series: MAY 2020

Question Tag: FIFO Method

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FA – May 2021 – L1 – SB – Q6b – Accounting for Inventories in Accordance with IAS 2

Calculate the cost of plastic buckets sold during the period using the First-in-First-Out (FIFO) method.

IMAC – DEC 2022 – L1 – Q4 – Accounting for Inventory and Labour

Explanation of inventory discrepancies, preparation of a FIFO inventory statement, sources of management information, and explanation of an investment center.

IMAC – MAY 2020 – L1 – Q4 – Accounting for Inventory and Labour | Standard Costing and Variance Analysis

Compare FIFO and weighted average inventory valuation, compute profit, and explain standard costing concepts.

FA – May 2021 – L1 – SB – Q6b – Accounting for Inventories in Accordance with IAS 2

Calculate the cost of plastic buckets sold during the period using the First-in-First-Out (FIFO) method.

IMAC – DEC 2022 – L1 – Q4 – Accounting for Inventory and Labour

Explanation of inventory discrepancies, preparation of a FIFO inventory statement, sources of management information, and explanation of an investment center.

IMAC – MAY 2020 – L1 – Q4 – Accounting for Inventory and Labour | Standard Costing and Variance Analysis

Compare FIFO and weighted average inventory valuation, compute profit, and explain standard costing concepts.

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FA – May 2021 – L1 – SB – Q6b – Accounting for Inventories in Accordance with IAS 2

Calculate the cost of plastic buckets sold during the period using the First-in-First-Out (FIFO) method.

You're reporting an error for "FA – May 2021 – L1 – SB – Q6b – Accounting for Inventories in Accordance with IAS 2"

IMAC – DEC 2022 – L1 – Q4 – Accounting for Inventory and Labour

Explanation of inventory discrepancies, preparation of a FIFO inventory statement, sources of management information, and explanation of an investment center.

You're reporting an error for "IMAC – DEC 2022 – L1 – Q4 – Accounting for Inventory and Labour"

IMAC – MAY 2020 – L1 – Q4 – Accounting for Inventory and Labour | Standard Costing and Variance Analysis

Compare FIFO and weighted average inventory valuation, compute profit, and explain standard costing concepts.

You're reporting an error for "IMAC – MAY 2020 – L1 – Q4 – Accounting for Inventory and Labour | Standard Costing and Variance Analysis"

FA – May 2021 – L1 – SB – Q6b – Accounting for Inventories in Accordance with IAS 2

Calculate the cost of plastic buckets sold during the period using the First-in-First-Out (FIFO) method.

You're reporting an error for "FA – May 2021 – L1 – SB – Q6b – Accounting for Inventories in Accordance with IAS 2"

IMAC – DEC 2022 – L1 – Q4 – Accounting for Inventory and Labour

Explanation of inventory discrepancies, preparation of a FIFO inventory statement, sources of management information, and explanation of an investment center.

You're reporting an error for "IMAC – DEC 2022 – L1 – Q4 – Accounting for Inventory and Labour"

IMAC – MAY 2020 – L1 – Q4 – Accounting for Inventory and Labour | Standard Costing and Variance Analysis

Compare FIFO and weighted average inventory valuation, compute profit, and explain standard costing concepts.

You're reporting an error for "IMAC – MAY 2020 – L1 – Q4 – Accounting for Inventory and Labour | Standard Costing and Variance Analysis"

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