Butler Ltd makes stylish, stainless steel cutlery. 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 metal alloy inventory account for December using:
(i) FIFO cost Gi) CWA cost Interpret each inventory account by indicating the cost of metal alloy issued to production during December and the quantity and value of closing inventory at 31 December.

(b) Discuss the advantages and disadvantages of the two methods and conclude by recommending which method Butler Ltd 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