MGT101 – Financial Accounting Home Comforts is dealing in the manufacturing of wood

| September 9, 2016

Question
MGT101 – Financial Accounting

Home Comforts is dealing in the manufacturing of wood productssince last two decade in more than 5 cities of Pakistan. The company uses First in First out (FIFO) method for costing its raw materials. On 1st January 2016, the stocks of raw material, work in process and finished goods were $ 20,000, $ 8,000 and $ 3,000 respectively. During the year, material was purchased on 10thJanuary and 15th July at $ 100,000 and $ 60,000 respectively with total freight inward of $ 1,000. Direct Labor cost was $ 50,000 and marketing manager salary was of $ 70,000 while conversion cost was recorded as $ 80,000.
At the year end, no inventories were found in hand except work in process which was twice of the balance as on 31st December 2015.

Required:
1.Calculate the following: Describe the impact on total factory cost determined by the Home Comforts if we use Last in First out (LIFO) method.
1.Cost of material consumed
2.Total factory cost
3.Factory overhead cost

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