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Solving First In, First Out Accounting Problems

This is the following problem:
Idaho Paper Co include the following information relating to the current year:
Dec 31 Jan 1
Materials inventory................................................... $20,000 $25,000
Work in process inventory........................................ $37,500 $40,000
Finished goods inventory, Jan 1
(10,000 units @ $21 per unit) ? $210,000
Purchases of direct materials during the year $330,000
Direct labor costs assigned to production $375,000
Manufacturing overhead $637,500

The company manufactures a single product, during the current year 45,000 units were manufactured and 40,000 units were sold. Therefore, with this information, answer the following:

A. Prepare a schedule of the cost of finished goods manufactured for the current year (show a supporting computation of the cost of direct materials used during the year.

B. Compute the average per unit cost of production during the current year.

C. Compute the cost of goods sold during the year, assuming the FIFO method of inventory costing is used.

D. Compute the cost of inventory of finished goods by December 31 of the current year, assuming that the FIFO method of inventory costing is used.

Solution Summary

The solution assists with solving first in, first out accounting problems. It assists with preparing a schedule of the cost of finished goods manufactured for the current year, computes the average per unit cost, cost of goods sold and cost of inventory of finished goods.

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