ACTIVITY

GROUP NO.
: SCORE:
SECTION: BSAIS 2A AFAR 1 - GRP 4
ACTIVITY #4
1. SAFETY STOCK; ORDER POINT.

Albedo’s usage of Material A is 9,600 units during 240 working days per year. Normal lead time
and maximum lead time are 20 working days and 35 working days, respectively.
Required: Assuming Material A will be required evenly throughout the year, what is the:
a) Safety Stock.
b) Order Point.
2. EOQ AND QUANTITY DISCOUNT.

A material is purchased by Han Jumin for $3 per unit. Monthly usage is 1,500 units, the ordering
cost is $50 per order, and the annual carrying cost is 40%.
Required:
1) Compute the economic order quantity.
2) Determine the proper order size if the material can be purchased at a 5% discount in lots of
2,000 units.
3. EOQ; ORDER & CARRYING COSTS.

Sunoo Corporation buys a material for P20 per unit. Sixteen thousand parts a year art needed.
Carrying cost is P3.00 per unit and the ordering cost is P15.
Required:
a) Compute the economic order quantity.
b) Prepare a tabular analysis to compute the total costs assuming the following order sizes: 100
units, 200 units, 400 units, 1,600 units and 6,400 units. The table should have the following
columns: order size, number of orders, cost per order, total ordering costs, average inventory,
carrying cost per unit, totul carrying costs, and total costs.
4. FIFO AND AVERAGE.

The following information is to be used in costing inventory of Xi Company on August 31, 2022.
August 1 Beginning balance 1,600 units @ P6.00

August 5 Purchased 400 units @ P7.00
August 16 Issued 800 units
August 27 Issued 1,000 units
Required: The cost of materials used and the cost assigned to the August 31 inventory by each of
these perpetual inventory costing methods:
1) First-in, first-out.
2) Average.
5. FIFO AND LIFO.
The records of the Hirai Momo Company show the following data for Item A:
Balance, January 1 200 units @ $10 per unit
Purchases
Units Price per Units Sales Units
January 12 100 $11

February 1 200
April 16 200 12
May 1 100
July 15 100 14
November 10 100
December 5 100 17 .
500 400
The sales price for Item A was $15 per unit throughout the year.
Required:
1) Compute the cost of the ending inventory under the fifo method when a periodic inventory
system is used.
2) Compute the cost of the ending inventory under the lifo method:
a) when a periodic inventory system is used and.
b) when a perpetual inventory system is used.
6. FIFO AND LIFO.

Identify the inventory procedure, LIFO or FIFO, to which the following features are attributed:
a) Matches actual physical flow of goods in most cases.

b) Matches old costs with new prices.
c) Costs inventory at approximate replacement cost.
d) Matches new costs with new prices.
e) Emphasizes the balance sheet.
f) Emphasizes the income statement.
7. BACKFLUSHING.
The Akaashi Manufacturing Company has a cycle time of 2.0 days, uses a Raw and In Process
account (RIP) and charges all conversion cost to Cost of Goods Sold. At the end of each month,
all inventories are counted, their conversion cost components are estimated and inventory
account balances are adjusted. Raw materials cost is backflushed from RIP to Finished Goods.
The following is for the month of May.
RIP beginning, including P12,000 of conversion cost P 40,000

FG beginning, including P 8,800 of conversion cost 35,000
Raw materials purchased on credit 230,000
RIP end, including P 15,700 of conversion cost 28,500
FG end, including P 13,100 of conversion cost 19,800
Conversion cost-P180,000 of direct labor and P 225,000 of overhead
Requirements:
1) Amount of materials backflushed from RIP to Finished Goods.
2) Amount of materials backflushed from Finished Goods to Cost of Goods Sold.
3) Journal entries to record the given transactions.
8. BACKFLUSH COSTING.
The Basic Lang To Promise Manufacturing Company produces finished product within two days
of the receipt of raw materials. Inventory accounts consist of a supplies account for indirect
factory materials, a finished goods account, and a combined raw and in process (RIP) inventory
account. All conversion costs are charged to the cost of goods sold account. At the end of each
month, all inventories are counted, their conversion cost components are estimated, and
inventory account balances are adjusted. Raw material cost is backflushed from RIP to Finished
Goods and from Finished Goods to Cost of Goods Sold. The following information is a summary
of selected transactions and other information for June:
Beginning balances in inventory accounts are:
Raw and in Process $41,600

Finished Goods 370,000
Supplies 31,000
The June 1 RIP balance consisted of $40,000 cost of materials, most of which were not yet in
process, plus a $1,600 conversion cost estimate assigned to partially processed work. The
Finished Goods balance consisted of $190,000 material cost and a $180,000 estimate of
conversion cost.
June 30 inventories based on physical count:
Raw and In Process $ 47,900

Finished Goods 360,000
Supplies 17,000
The June 30 RIP amount consisted of a $46,000 cost of materials, most of which were not yet in
process, plus a $19000 Conversion cost estimate assigned to partially processed work. The
Finished Goods amount consisted of $182,000 material cost and a $178.000 estimate of
conversion cost.
(a) Direct materials received on credit cost $850,000.

(b) Indirect materials used cost $13,000.
(c) Gross payroll of $400,000 is accrued: the payroll is paid.
(d) The payroll distribution was:

Direct labor $ 60,000
Indirect factory labor 120,000
Marketing salaries 130,000
Administrative salaries 90,000
(e) Factory overhead costs:

Depreciation $668,000
Insurance 13,000
(f) Miscellaneous factory overhead costs:

Paid in cash $54,000
On account 29,000
(g) The factory overhead accumulated in the factory overhead control account was expensed to
Cost of Goods Sold.
(h) The material cost component of completed work is backflushed from RIP.
(i) The material cost component of work sold is backflushed from Finished Goods.
(j) Ending balances are established in inventory accounts by adjusting their conversion cost
components.
Required:
1) Prepare journal entries based on the preceding information.
2) Prepare completed T accounts for RIP, Finished Goods, and Cost of Goods Sold.

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GROUP NO.

1. SAFETY STOCK; ORDER POINT.

2. EOQ AND QUANTITY DISCOUNT.

3. EOQ; ORDER & CARRYING COSTS.

4. FIFO AND AVERAGE.

August 1 Beginning balance 1,600 units @ P6.00

January 12 100 $11

6. FIFO AND LIFO.

a) Matches actual physical flow of goods in most cases.

RIP beginning, including P12,000 of conversion cost P 40,000

Beginning balances in inventory accounts are:

Raw and in Process $41,600

June 30 inventories based on physical count:

Raw and In Process $ 47,900

(a) Direct materials received on credit cost $850,000.

(d) The payroll distribution was:

(e) Factory overhead costs:

(f) Miscellaneous factory overhead costs:

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