- 20 Marks
IMAC – AUG 2022 – L1 – Q4 – Inventory Management
Calculation of cost of goods issued and closing inventory using the weighted average method, and identification of causes for material and labour cost variances.
Question
Question: a) The following extracts are from the books of Bediako Enterprise in the month of February:
| Date | Description | Units | Per unit cost (GH¢) |
|---|---|---|---|
| 01 | Receipts | 400 | 42 |
| 04 | Receipts | 700 | 45 |
| 07 | Issue | 450 | |
| 10 | Receipts | 600 | 48 |
| 14 | Issue | 700 | |
| 20 | Receipts | 1,200 | 50 |
Required: Using the Weighted Average Method;
i) Calculate the cost of goods issued to Cost of Sales. (3 marks)
ii) Compute the value of closing inventory. (12 marks)
b) Identify TWO (2) possible causes for each of the following variances:
i) Material cost variance.
ii) Labour cost variance. (5 marks)
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