Material Costing Methods Q&A

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on March 25, 2022

1. What is a materials requisition form?

2. What is a bill of materials?

3. What journal entry is required when materials are issued from the store?

4. Write down the most important methods of pricing material issues.

5. What are cost price methods?

6. Explain the first in, first out (FIFO) method of material costing.

7. What are three advantages of the FIFO method?

8. Define the last in, first out (LIFO) method of material costing.

9. What are three advantages of the LIFO method?

10. What is the average cost method?

Frequently Asked Questions

What does material requisition form contain?

Material requisition form (MRF) has job number, date of the request, date needed, item description, number, amount, and signatures.

Why do companies use LIFO?

The average-cost system simplifies the process of tracking and calculating cost by using an average figure, especially helpful for businesses that deal with large volumes.

Why do companies use LIFO?

Why do companies use LIFO?

What is the rule of FIFO?

First in, First out (FIFO) is a labeling method that requires you to label food with its expiration dates, then store it from older to newer. This allows you to find food more quickly and use it more efficiently.

Why is the bill of materials important?

A Bill of Materials ensures that all departments are working together toward mutual goals. To create an accurate BoM, you need input from design, procurement, manufacturing, and sales.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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