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:
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 1/3rdcomplete at month end.
- Calculate the cost per equivalent unit for the month of April using the weighted average method of process costing.
- 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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