Akuntansi Biaya Modul ke: Material: Controlling, Costing, and Planning. Materials Procurement and Use. Quantitative Models. Material Control. Inventory Costing Method. Fakultas FEB Angela Dirman, SE., M.Ak Program Studi Manajemen www.mercubuana.ac.id
Content Material: Controlling, Costing, and Planning
Competence Mahasiswa mampu mendeskripsikan system pembelian dan penggunaan bahan baku
Material: Controlling, Costing, and Planning. Materials Procurement and Use. Quantitative Models. Material Control. Inventory Costing Method. Akuntansi Biaya Pokok Bahasan Modul dari Pertemuan
Describe the importance of control over inventory. 6-4
Safeguarding Inventory Two primary objectives of control over inventory are: 1. Safeguarding the inventory, and 2. Properly reporting it in the financial statements.
Safeguarding Inventory The purchase order authorizes the purchase of the inventory from an approved vendor. The receiving report establishes an initial record of the receipt of the inventory. The amount of inventory is always available in the subsidiary inventory ledger.
Safeguarding Inventory Controls for safeguarding inventory should include security measures to prevent damage and customer or employee theft. Some examples of security measures include the following: 1. Storing inventory in areas that are restricted to only authorized employees.
Safeguarding Inventory 2. Locking high-priced inventory in cabinets. 3. Using two-way mirrors, cameras, security tags, and guards.
Reporting Inventory A physical inventory or count of inventory should be taken near year-end to make sure that the quantity of inventory reported in the financial statements is accurate.
6-10 Describe three inventory cost flow assumptions and how they impact the statement of comprehensive income and statement of financial position.
Inventory Cost Flow Methods
Basic Data May 10 Purchase 1 $ 9 18 Purchase 1 13 24 Purchase 1 14 Total 3 $36 Average cost per unit: $12 ($36 3 units)
Inventory Cost Flow Assumptions Assume that one unit is sold on May 30 for $20. Depending upon which unit was sold, the gross profit varies from $11 to $6 as shown below:
Inventory Cost Flow Assumptions Under the specific identification inventory cost flow method, the unit sold is identified with a specific purchase. Not practical unless each inventory unit can be separately identified.
Under the first-in, first out (FIFO) inventory cost flow method, the first units purchased are assumed to be sold and the ending inventory is made up of the most recent purchases. Inventory Cost Flow Assumptions
Inventory Cost Flow Assumptions Under the last-in, first out (LIFO) inventory cost flow method, the last units purchased are assumed to be sold and the ending inventory is made up of the first purchases.
Inventory Cost Flow Assumptions Under the average inventory cost flow method, the cost of the units sold and in ending inventory is an average of the purchase costs.
Inventory Costing Methods
Inventory Costing Methods (continued)
Inventory Costing Methods (continued)
Use of Inventory Costing Methods* *Firms may be counted more than once for using multiple methods
Example Cost Flow Methods Three identical units of Item QBM are purchased during February, as shown below. Item QBM Units Cost Feb. 8 Purchase 1 $ 45 15 Purchase 1 48 26 Purchase 1 51 Total 3 $144 Average cost per unit $48 ($144 3 units) Assume that one unit is sold on February 27 for $70. Determine the gross profit for February and ending inventory on February 28 using the (a) first-in, first-out (FIFO); (b) last-in, firstout (LIFO); and (c) average cost methods. 6-22
Gross Profit Ending Inventory (a) First-in, first-out (FIFO): $25 ($70 $45) $99 ($48 + $51) (b) Last-in, first-out (LIFO): $19 ($70 $51) $93 ($45 + $48) (c) Average cost: $22 ($70 $48) $96 ($48 2) 6-23
6-24 Determine the cost of inventory under the perpetual inventory system, using the FIFO, LIFO, and average cost methods.
First-In, First-Out Method On January 1, the firm had 100 units of Item 127B that cost $20 per unit. Item 127B Units Cost Jan. 1 Inventory 100 $20
First-In, First-Out Method On January 4, the firm sold 70 units of 127B at $30 each. Item 127B Units Cost Jan. 1 Inventory 100 $20 4 Sale 70
Entries and Perpetual Inventory Account (FIFO)
First-In, First-Out Method On January 10, the firm purchased 80 units at $21 each. Item 127B Units Cost Jan. 1 Inventory 100 $20 4 Sale 70 10 Purchase 80 21
Entries and Perpetual Inventory Account (FIFO) (continued) 10 Merchandise Inventory 1,680 Accounts Payable 1,680
First-In, First-Out Method On January 22, the firm sold 40 units for $30 each. Item 127B Units Cost Jan. 1 Inventory 100 $20 4 Sale 70 10 Purchase 80 21 22 Sale 40
Entries and Perpetual Inventory Account (FIFO) (continued)
First-In, First-Out Method On January 28, the firm sold 20 units at $30 each. Item 127B Units Cost Jan. 1 Inventory 100 $20 4 Sale 70 10 Purchase 80 21 22 Sale 40 28 Sale 20
Entries and Perpetual Inventory Account (FIFO) (continued)
First-In, First-Out Method On January 30, purchased one hundred additional units of Item 127B at $22 each. Item 127B Units Cost Jan. 1 Inventory 100 $20 4 Sale 70 10 Purchase 80 21 22 Sale 40 28 Sale 20 30 Purchase 100 22
Entries and Perpetual Inventory Account (FIFO) (continued)
Entries and Perpetual Inventory Account (FIFO) (concluded) Cost of goods sold January 31 inventory
Example Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales for Item ER27 are as follows: Nov. 1 Inventory 40 units at $5 5 Sale 32 units 11 Purchase 60 units at $7 21 Sale 45 units Assuming a perpetual inventory system and the first-in, firstout (FIFO) method, determine (a) the cost of goods sold on the November 21 and (b) the inventory on November 30. 6-37
a) Cost of goods sold (November 21): 8 units at $5 $40 37 units at $7 259 45 units $299 b) Inventory, November 30: $161 = (23 units $7) 6-38
Last-In, First-Out Method On January 1, the firm had 100 units of Item 127B that cost $20 per unit. Item 127B Units Cost Jan. 1 Inventory 100 $20
Last-In, First-Out Method On January 4, the firm sold 70 units of 127B at $30 each. Item 127B Units Cost Jan. 1 Inventory 100 $20 4 Sale 70
Entries and Perpetual Inventory Account (LIFO)
Last-In, First-Out Method On January 10, the firm purchased 80 units at $21 each. Item 127B Units Cost Jan. 1 Inventory 100 $20 4 Sale 70 10 Purchase 80 21
Entries and Perpetual Inventory Account (LIFO) (continued) 10 Merchandise Inventory 1,680 Accounts Payable 1,680
Last-In, First-Out Method On January 22, the firm sold 40 units for $30 each. Item 127B Units Cost Jan. 1 Inventory 100 $20 4 Sale 70 10 Purchase 80 21 22 Sale 40
Entries and Perpetual Inventory Account (LIFO) (continued) Date Jan. 1 4
Last-In, First-Out Method On January 28, the firm sold 20 units at $30 each. Item 127B Units Cost Jan. 1 Inventory 100 $20 4 Sale 70 10 Purchase 80 21 22 Sale 40 28 Sale 20
Entries and Perpetual Inventory Account (LIFO) (continued) Date Jan. 1 4
Last-In, First-Out Method On January 30, the firm purchased one hundred additional units of Item 127B at $22 each. Item 127B Units Cost Jan. 1 Inventory 100 $20 4 Sale 70 10 Purchase 80 21 22 Sale 40 28 Sale 20 30 Purchase 100 22
Entries and Perpetual Inventory Account (LIFO) (continued) Date Jan. 1 4 10
Entries and Perpetual Inventory Account (LIFO) (concluded) Cost of Goods Sold January 31 Inventory
Example Perpetual Inventory Using LIFO Beginning inventory, purchases, and sales for Item ER27 are as follows: Nov. 1 Inventory 40 units at $5 5 Sale 32 units 11 Purchase 60 units at $7 21 Sale 45 units Assuming a perpetual inventory system and using the lastin, first-out (LIFO) method, determine (a) the cost of goods sold on November 21 and (b) the inventory on November 30. 6-51
a) Cost of goods sold (November 21): $315 = (45 units $7) b) Inventory, November 30: 8 units @ $5 $ 40 15 units @ $7 105 23 $145 6-52
Average Cost Method 1. When the average cost is used in a perpetual system, an average unit cost for each item is computed each time a purchase is made. 2. The unit cost is then used to determine the cost of each sale until another purchase is made. 3. A new average is computed. 4. This averaging technique is called a moving average.
6-54 Determine the cost of inventory under the periodic inventory system, using the FIFO, LIFO, and average cost methods.
First-In, First-Out Method Using FIFO, the earliest batch purchased is considered the first batch of merchandise sold. The physical flow does not have to match the accounting method chosen.
FIFO Method Jan. 1 100 units @ $20 = $2,000 Jan. 10 80 units @ $21 = 1,680 Jan. 30 100 units @ $22 = 2,200 280 units available for sale during year $5,880 Cost of merchandise available for sale
FIFO Method The physical count on January 31 shows that 150 units are on hand (conclusion: 130 units were sold). What is the cost of the ending inventory? Jan. 1 Jan. 10 Jan. 30 Sold 100 units these @ $20 Sold 30 of the 80 80 units @ $21 50 units @ $21 100 units @ $22 = $ 0 = 1,050 = 2,200 Ending inventory $3,250
FIFO Method Now we can calculate the cost of goods sold as follows: Beginning inventory, January 1 $2,000 Purchases ($1,680 + $2,200) 3,880 Cost of merchandise available for sale $5,880 Ending inventory, January 31 3,250 Cost of goods sold $2,630
First-In, First-Out Flow of Costs
Last-In, First-Out Method Using LIFO, the most recent batch purchased is considered the first batch of merchandise sold. The actual flow of goods does not have to be LIFO. For example, a store selling fresh fish would want to sell the oldest fish first (which is FIFO) even though LIFO is used for accounting purposes.
LIFO Method Jan. 1 100 units @ $20 = $2,000 Jan. 10 80 units @ $21 = 1,680 Jan. 30 100 units @ $22 = 2,200 280 units available for sale during year $5,880 Cost of merchandise available for sale
LIFO Method Assume again that the physical count on January 31 is 150 units (and that 130 units were sold). What is the cost of the ending inventory? Jan. 1 Jan. 10 100 units @ $20 50 units @ $21 80 units $21 Sold 30 of the 80 = $2,000 = 1, 1,050 680 Jan. 30 Sold 100 units these @ $22 = = 2,2000 Ending inventory $3,050
LIFO Method Now we can calculate the cost of goods sold as follows: Beginning inventory, January 1 $2,000 Purchases ($1,680 + $2,200) 3,880 Cost of merchandise available for sale $5,880 Ending inventory, January 31 3,050 Cost of goods sold $2,830
Last-In, First-Out Flow of Costs
Average Cost Method The average cost method is sometimes called the weighted average method. It uses the average unit cost for determining cost of merchandise sold and the ending merchandise inventory.
Average Cost Method The weighted average unit cost is determined as follows: Total Cost of Units Available for Sale Average Unit Cost = Units Available for Sale
Average Cost Method Jan. 1 100 units @ $20 = $2,000 Jan. 10 80 units @ $21 = 1,680 Jan. 30 100 units @ $22 = 2,200 280 $5,880 Average unit cost: $5,880 280 = $21 Cost of goods sold: 130 units at $21 = $2,730 Ending merchandise inventory: 150 units at $21= $3,150
Average Cost Method Now we can calculate the cost of goods sold as follows: Beginning inventory, January 1 $2,000 Purchases ($1,680 + $2,200) 3,880 Cost of merchandise available for sale $5,880 Ending inventory, January 31 3,150 Cost of goods sold $2,730
Example Periodic Inventory Using FIFO, LIFO, Average Cost Methods The units of an item available for sale during the year were as follows: Jan. 1 Inventory 6 units at $50 $ 300 Mar. 20 Purchase 14 units at $55 770 Oct. 30 Purchase 20 units at $62 1,240 Available for sale 40 units $2,310 There are 16 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method, (b) the last-in, first-out (LIFO) method, and (c) the average cost method. 6-69
a) First-in, first-out (FIFO) method: $992 (16 units $62) b) Last-in, first-out (LIFO) method: $850 (6 units $50) + (10 units $55) c) Average method: $924 (16 units $57.75) where average cost = $57.75 ($2,310 40 units) 6-70
Compare and contrast the use of the three inventory costing methods. 6-71
Partial Statement of Comprehensive Incomes First-In, First-Out Net sales $3,900 Cost of goods sold: Beginning inventory $2,000 Purchases 3,880 Merchandise available for sale $5,880 Less ending inventory 3,250 Cost of goods sold 2,630 Gross profit $1,270
Partial Statement of Comprehensive Incomes Average Cost Net sales $3,900 Cost of goods sold: Beginning inventory $2,000 Purchases 3,880 Merchandise available for sale $5,880 Less ending inventory 3,150 Cost of goods sold 2,730 Gross profit $1,170
Partial Statement of Comprehensive Incomes Last-In, First-Out Net sales $3,900 Cost of goods sold: Beginning inventory $2,000 Purchases 3,880 Merchandise available for sale $5,880 Less ending inventory 3,050 Cost of goods sold 2,830 Gross profit $1,070
Recap Weighted FIFO Average LIFO Ending inventory $3,250 $3,150 $3,050 Cost of goods sold $2,630 $2,730 $2,830 Gross profit $1,270 $1,170 $1,070
Daftar Pustaka Kieso, Weygandt, Accounting Principle. 2013. IFRS Edition. John Wiley & Sons Publishing. Warren, Reeve, Duchac, dan Wang. 2014. Principle of Financial Accounting with Conceptual Emphasis on IFRS. 2nd Edition. Cengage Learning Asia Pte Ltd. William K.Carter & Milton F. Usry, (2008). Cost Accounting. 14 th Edition, South Western Publishing Co,
Terima Kasih Angela Dirman, SE., M.Ak