Question

Explain the various methods of pricing material issue

Answer 1

Answer:

there are two methods

Explanation:

1.Actual Cost Method:

Where materials are purchased specially for a specific job, actual cost of materials is charged to that job. Such materials will normally be stored separately and issued only to that particular job.

2. First-In First-Out (FIFO) Method:

CIMA defines FIFO as “a method of pricing the issue of material using, the purchase price of the oldest unit in the stock”. Under this method materials are issued out of stock in the order in which they were first received into stock. It is assumed that the first material to come into stores will be the first material to be used.

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