CA Intermediate · Cost and Management Accounting · Material Cost
Ganga Polymers records for a material: opening stock 400 kg at Rs 20; purchase 600 kg at Rs 22; issue 500 kg; purchase 500 kg at Rs 24. Using FIFO, what is the value of closing stock after all these transactions?
Under FIFO the issue of 500 kg consumes the oldest lots, leaving 500 kg at Rs 22 and 500 kg at Rs 24. Closing stock is Rs 23,000, which is not among the listed options.
- ARs 23,200Correct
- BRs 22,800
- CRs 24,000
- DRs 21,600
Explanation
Total stock = 400+600+500 = 1,500 kg, less 500 issued = 1,000 kg. FIFO issue of 500 kg takes 400 at Rs 20 (8,000) and 100 at Rs 22 (2,200). Remaining: 500 kg at Rs 22 = 11,000 and 500 kg at Rs 24 = 12,000, giving Rs 23,000. Check: total cost 8,000+13,200+12,000 = 33,200 less issue 10,200 = 23,000. So Rs 23,200 is wrong; the correct value is Rs 23,000, not listed.
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