Someone to help get the peps first in, first out) out of this exercise
UNIT 2 Evaluation
Article "B" has the following movement in the month of February 2015:
CONCEPT
day
2
4
18
18
22
26
EXERCISE No. 4
26
120 items are received in the raw materials warehouse, the cost of which
unit is $135.00
60 items are sent to the production department.
190 items are received in the raw materials warehouse, the cost of which
unit is $142.00.
90 items are sent to the production department.
110 items are received in the raw materials warehouse, the cost of which
unit is $128.00.
165.00 items are received in the raw materials warehouse, the cost of which
unit is $149.00
185 items are sent to the production department.
To implement the First-In, First-Out (FIFO) method, we need to determine the order in which the items were received and sent to the production department. Based on the information provided, here is the calculation:
1. Calculate the total quantity and cost for each batch of items received:
- Batch 1: 120 items received at a unit cost of $135.00 (Total cost = 120 * 135.00 = $16,200.00)
- Batch 2: 190 items received at a unit cost of $142.00 (Total cost = 190 * 142.00 = $26,980.00)
- Batch 3: 110 items received at a unit cost of $128.00 (Total cost = 110 * 128.00 = $14,080.00)
- Batch 4: 165 items received at a unit cost of $149.00 (Total cost = 165 * 149.00 = $24,585.00)
2. Calculate the total quantity and cost for each batch of items sent to the production department:
- Batch 1: 60 items sent (Total cost remains the same as it is before the items are sent)
- Batch 2: 90 items sent (Total cost remains the same as it is before the items are sent)
- Batch 3: No items sent
- Batch 4: 185 items sent (Total cost remains the same as it is before the items are sent)
3. Calculate the remaining items in the raw materials warehouse:
- Batch 1: 120 - 60 = 60 items
- Batch 2: 190 - 90 = 100 items
- Batch 3: 110 items
- Batch 4: 165 - 185 = -20 items (This means we have a negative quantity and should be adjusted)
Based on the information provided, it seems there is an error in the data as we cannot have a negative quantity in the warehouse. It's best to double-check the data and make the necessary corrections.
To calculate the cost of the items according to the first-in, first-out (FIFO) method, follow these steps:
Step 1: Determine the order of the transactions based on the receipt or issue dates.
Based on the given information, the order of the transactions is as follows:
1. Initial stock on hand (not provided)
2. February 2: 120 items received at $135.00 per unit
3. February 4: 60 items issued from the stock
4. February 18: 190 items received at $142.00 per unit
5. February 18: 90 items issued from the stock
6. February 22: 110 items received at $128.00 per unit
7. February 26: 165 items received at $149.00 per unit
8. February 26: 185 items issued from the stock
Step 2: Calculate the cost of the items issued for each transaction.
Let's calculate the cost of the items issued in each transaction:
1. February 4: 60 items issued
Cost per unit: $135.00
Total cost: 60 * $135.00 = $8,100.00
2. February 18: 90 items issued
Cost per unit: $135.00
Total cost: 90 * $135.00 = $12,150.00
3. February 26: 185 items issued
Cost per unit: $149.00
Total cost: 185 * $149.00 = $27,565.00
Step 3: Calculate the total cost of the items issued.
Add up the costs of the items issued in each transaction:
$8,100.00 + $12,150.00 + $27,565.00 = $47,815.00
Therefore, the cost of the items issued, based on the FIFO method, is $47,815.00.
To apply the first in, first out (FIFO) method and determine the value of items sent to the production department, we need to follow these steps:
1. Start by creating a table to track the movement of items in the raw materials warehouse:
| Movement | Day | Quantity | Unit Cost |
|----------|-----|----------|-----------|
| Receive | 2 | 120 | $135.00 |
| Send | 4 | 60 | |
| Receive | 18 | 190 | $142.00 |
| Send | 18 | 90 | |
| Receive | 22 | 110 | $128.00 |
| Receive | 26 | 165.00 | $149.00 |
| Send | 26 | 185 | |
2. Calculate the cost of items sent to the production department using the FIFO method:
- On the day of February 4th, 60 items were sent. To determine the cost, we take the oldest items first, which are the 120 items received on February 2nd. So, the cost of 60 items sent is 60 x $135.00 = $8,100.00.
- On the day of February 18th, 90 items were sent. We take the remaining 60 items from the February 2nd receipt and 30 items from the February 18th receipt. So, the cost of 90 items sent is 60 x $135.00 + 30 x $142.00 = $13,170.00.
- On the day of February 26th, 185 items were sent. We take the remaining 40 items from the February 18th receipt and 145 items from the February 26th receipt. So, the cost of 185 items sent is 40 x $142.00 + 145 x $149.00 = $37,890.00.
Therefore, the total cost of items sent to the production department (according to the FIFO method) is $8,100.00 + $13,170.00 + $37,890.00 = $59,160.00.