Perfect Pans Ltd manufactures cooking pans. On 1 December the inventory records show 500 kg of metal alloy, which is valued at £2.00 per kg. The goods received notes and materials requisitions show the following receipts and issues during the month:

Required

(a) Prepare the inventory account for Perfect Pans Ltd and calculate the cost of metal alloy used in the production process during December and the inventory balance in terms of quantity and value at the end of the month using:
(i) FIFO cost (ii) CWA cost

(b) Assuming that the business needs to choose between the two methods, recommend which method management should adopt, giving at least five reasons.

Transcribed Image Text:

2 December 7 December 8 December 14 December 15 December 30 December 31 December Issued 450 kg to production Received 550 kg at 2.10 per kg Issued 500 kg to production Received 600 kg at 2.20 per kg Issued 600 kg to production Received 500 kg at 2.30 per kg Issued 100 kg to production