ABC Ltd uses the LIFO method for recording inventory

13 Sep

Cost and Management Accounting

1. Ashish had joined the labour control and payment system of Navneet Ltd. He was asked by his manager to prepare a report on the various activities involved in the cost accounting for the labour. Provide various inputs that he has to keep in mind while preparing the report.

2. ABC Ltd uses the LIFO method for recording inventory. The details of the company are as follows:

Jul-14 Particulars
1 Opening balance 400 liters @ ₹28.00 per litre
4 Purchased 300 liters @ ₹27 per litre
7 Issued 200 litres
10 Issued 300 litres
22 Purchased 490 liters @ ₹25.00 per litre
25 Issued 300 litres

Prepare a stores ledger account using the LIFO method and explain the relevance of this method.

3. To make 15 Kg. of a product, the standard materials required are as follows:

Materials Amount Price
A 10 kg @ 8
B 3 Kg. @ 10
C 2 Kg. @ 12

During the month of July, 1,500 Kg. of the product was produced. The actual materials consumed were as follows:

Materials Amount Price
A 900 kg @ 7
B 400 Kg. @ 8
C 200 Kg. @ 10

Calculate and interpret whether the variance is favourable or unfavourable:

a. Material Cost Variance

b. Material Price Variance


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