1. The raw materials account of Franklin Inc. reflected the following changes du

Question

1. The raw materials account of Franklin Inc. reflected the following changes during April:

Opening balance

500 units @ $10

Received

200 units @ $12

Issued

400 units

Issued

100 units

Received

300 units @ $15

Other costs during the month included the following:

Direct labor

$8,000

Factory overhead

6,000

One thousand units of product were completed, of which 800 were sold and 200 remained on hand. There was no beginning inventory in finished goods. The company uses a perpetual inventory system.

a.

Using FIFO, what are the end-of-month balances for each of the following accounts?

(1)

Raw Materials Inventory

(2)

Finished Goods Inventory

(3)

Cost of Goods Sold

b.

Using LIFO, what are the end-of-month balances for each of the following accounts?

(1)

Raw Materials Inventory

(2)

Finished Goods Inventory

(3)

Cost of Goods Sold

Opening balance

500 units @ $10

Received

200 units @ $12

Issued

400 units

Issued

100 units

Received

300 units @ $15

Explanation / Answer

a. FIFO Opening 500 10 5000 Received 200 12 2400 500 10 5000 200 12 2400 Issued 400 10 4000 100 10 1000 200 12 2400 Issued 100 10 1000 200 12 2400 Received 300 15 4500 200 12 2400 300 15 4500 Units Cost Material Cost 1000 5000 Labor 8000 Factory OH 6000 1000 19000 FG Inventory 200 3800 COGS 800 15200

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