Weighted Average Method of Material Costing

Weighted Average Cost: Definition In the weighted average cost method, the average cost of materials purchased is charged to the job or process rather than the actual cost. In other words, it is assumed that where a material is purchased at different prices, the unit cost will be the average cost of all units purchased over a particular period. Weighted Average Cost: Explanation The weighted avera…

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Last In, First Out (LIFO) Method of Inventory Valuation

Last In, First Out (LIFO): Definition Last in, first out (LIFO) is an inventory costing method that assumes the costs of the most recent purchases are the costs of the first item sold. The LIFO method, which applies valuation to a firm’s inventory, involves charging the materials used in a job or process at the price of the last units purchased. In other words, under the LIFO method, the cost of t…

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First In, First Out Method of Costing (FIFO)

First In, First Out (FIFO): Definition First in, first out (FIFO) is an inventory costing method that assumes the costs of the first goods purchased are the costs of the first goods sold. In terms of flow of cost, the principle that FIFO follows is clearly reflected in its name. Specifically, FIFO assumes that the first cost received in stores is the first cost that goes out from the stores. In ot…

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Valuation of Inventories and Their Record

The cost of any materials used in a business is unproblematic from an accounting perspective if every item of similar materials is purchased at the same price. In actual practice, however, market conditions are unstable and prices fluctuate. Thus, the store ledger cards for a given item of material are likely to show different prices for the same materials purchased at different times. Hence, the…

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Material Ledger Card

Materials Ledger Card: Definition and Explanation Costing means determining cost. Costing for materials involves studying different methods to calculate the cost of receipts, returns, and issues of materials. Better cost of the materials ledger cards is maintained for all items of materials. The materials ledger card is also known as the store ledger card. It provides a continuous record of materi…

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Material Costing Methods MCQs

Test your knowledge with this multiple choice question (MCQ) test on material costing methods. If you can answer every question correctly, it will be great preparation for your exams, interviews, and professional work. To begin, just click on the “Start Quiz” button. Time limit: 0 Quiz-summary 0 of 10 questions completed Questions: 1 2 3 4 5 6 7 8 9 10 Information Material costing method mcqs You…

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Material Costing Methods: Fill In the Blanks

1. A materials abstract is also known as a . See answer 2. Materials should be used by the storekeeper against . See answer 3. The first in, first out (FIFO) method of valuing material issues is suitable in times of . See answer 4. The last in, first out (LIFO) method of valuing material issues is suitable in times of . See answer 5. The average cost method of valuing material issues is suitable w…

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