At beginning of July 2021, Idah & Faith (IF) Co had 25 microwave ovens in inventory costing of K750 per unit. Over the next three months, the company made the following purchases.Date Quantity Unit cost K6 July 5 770 5 August 4 800 1 September 8 850 14 September 6 880 During that period, there were sales of 35 units, generating a total sales revenue of K38,500. REQUIRED: a) Prepare the stores ledger card for the materials in stock that records all material movements using: (i) FIFO method (ii) LIFO method b) Based on the work done in (a) above, determine the cost of sales and profit for three months to 30 September using FIFO and also based on LIFO. c) Compare the reported profit of the company in (b) above over the three months to 30 September based on the two methods (FIFO and LIFO) and comment on the results Explain each of these cost classifications below, with examples of the types of costs that may be included:(i) Fixed costs. (ii) Period costs. (iii) Variable costs. (iv) Prime costs.(b) List the four characteristics of service costing (c) Explain the differences between product costing and service costing. explain briefly.
At beginning of July 2021, Idah & Faith (IF) Co had 25 microwave ovens in inventory costing of K750 per unit. Over the next three months, the company made the following purchases.
Date Quantity Unit cost K
6 July 5 770
5 August 4 800
1 September 8 850
14 September 6 880
During that period, there were sales of 35 units, generating a total sales revenue of K38,500.
REQUIRED:
a) Prepare the stores ledger card for the materials in stock that records all material movements using:
(i) FIFO method
(ii) LIFO method
b) Based on the work done in (a) above, determine the cost of sales and profit for three months to 30 September using FIFO and also based on LIFO.
c) Compare the reported profit of the company in (b) above over the three months to 30 September based on the two methods (FIFO and LIFO) and comment on the results Explain each of these cost classifications below, with examples of the types of
costs
that may be included:
(i) Fixed costs.
(ii) Period costs.
(iii) Variable costs.
(iv) Prime costs.
(b) List the four characteristics of service costing
(c) Explain the differences between product costing and service costing. explain briefly.
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