SEMESTER SPRING 2012
Cost & Management Accounting (MGT-402)
Assignment No. 02
Due Date: 4th June 2012 — 7th June 2012
The learning objective of this Assignment No. 02 is to encourage the students for applying their knowledge about FIFO costing, which they have learned during
lesson No. 01 to 27. This will enhance the understanding of the students about FIFO costing method.
After solving this Assignment No. 02 the learners (students) are well aware about the FIFO costing techniques used for calculating the closing WIP cost and the finished goods inventory.
Science Developers – a lab instruments manufacturing and marketing company is working in far flung hilly areas of world renowned Scientific Country. At present, the company is involved in manufacturing and marketing of one of its famous chemical brand – Chemical. The Country’s Government has recently given the company an order for delivering Chemical in 500,000 lbs. The Company has started its work on the project on 1st February, 2012. The company has the
policy to cost material and units on the FIFO method.
On 30th April, 2012, Mr. Processor – In-charge of processing department, presented following monthly report to Mr. Chief. This report contains information about inventories, costs and production as under:
Calculate the following: (6 marks each)
a) Equivalent production units of material, labor and FOH
b) Unit costs of three cost elements
c) Cost of units transferred to finish goods inventory, using FIFO costing method.
d) Cost of the ending Work in process inventory
e) Number of units sold and the cost of the finished goods inventory on April 30, 2012 using the FIFO method.