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The following quotation is received from is supplier in respect of material xLot price 100kg,500kg and 1000 kg. rate per kg 5,4.50,4.00 trade discount is 20%.cash discount of 5% is allowed if payment is made within 15 days. one container is required for every 100 kg of material and containers are charged at rupees 1000 each but credited at rupees 9 of returned within 3 months.transport charges for any order rupees 50storage charges 15calculate the total material cost for 500 kg and ascertain the rate per kg of the material when the purchaser decides to purchase 500 kgs of the material
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The following quotation is received from is supplier in respect of mat...
Calculation of Material Cost for 500 kg:
1. Lot Price for 500 kg:
- Rate per kg = Rs. 4.50 (as it is the rate for the lot containing 500 kg)
- Total Lot Price = 500 kg x Rs. 4.50 per kg = Rs. 2,250
2. Trade Discount:
- Rate of discount = 20%
- Discount Amount = Rs. 2,250 x 20% = Rs. 450
- Net Price after Trade Discount = Rs. 2,250 - Rs. 450 = Rs. 1,800
3. Cash Discount:
- Rate of discount = 5%
- Discount Amount = Rs. 1,800 x 5% = Rs. 90
- Net Price after Cash Discount = Rs. 1,800 - Rs. 90 = Rs. 1,710
4. Container Charges:
- Number of containers required = 500 kg/100 kg = 5
- Total Container Charges = 5 x Rs. 1,000 = Rs. 5,000
- Credit for Containers Returned = 5 x Rs. 9 = Rs. 45 (assuming all containers are returned within 3 months)
5. Transport Charges:
- Transport Charges per order = Rs. 50 (regardless of the order size)
6. Storage Charges:
- Storage Charges per kg per month = Rs. 15
Total Material Cost for 500 kg:
- Net Price after all discounts = Rs. 1,710
- Container Charges = Rs. 5,000 (assuming no credit for returned containers)
- Transport Charges = Rs. 50
- Storage Charges for 1 month = Rs. 500 (500 kg x Rs. 15 per kg per month)
- Total Material Cost = Rs. 7,260
Rate per kg of Material when Purchasing 500 kg:
- Total Material Cost for 500 kg = Rs. 7,260
- Rate per kg = Total Material Cost / Quantity = Rs. 7,260 / 500 kg = Rs. 14.52 per kg
Explanation of Average Cost Inventory Method - Material Cost:
The Average Cost Inventory Method is a cost accounting method that is used to determine the average cost of inventory items. This method takes into account the total cost of all inventory items and divides it by the total quantity of inventory items to arrive at the average cost per unit. The average cost per unit is then used to value the inventory.
In the case of material cost, the Average Cost Inventory Method can be used to determine the average cost per kg of a material, based on the total cost of all lots purchased and the total quantity of material purchased. This average cost per kg can then be used to value the material inventory.
In the quotation provided, the Lot Price for different quantities of material is given, along with trade discount, cash discount, container charges, transport charges, and storage charges. Using this information, the material cost for a specific quantity of material can be calculated. If the purchaser decides to purchase a different quantity of material, the rate per kg can be calculated using the Average Cost Inventory Method.
1. Lot Price for 500 kg:
- Rate per kg = Rs. 4.50 (as it is the rate for the lot containing 500 kg)
- Total Lot Price = 500 kg x Rs. 4.50 per kg = Rs. 2,250
2. Trade Discount:
- Rate of discount = 20%
- Discount Amount = Rs. 2,250 x 20% = Rs. 450
- Net Price after Trade Discount = Rs. 2,250 - Rs. 450 = Rs. 1,800
3. Cash Discount:
- Rate of discount = 5%
- Discount Amount = Rs. 1,800 x 5% = Rs. 90
- Net Price after Cash Discount = Rs. 1,800 - Rs. 90 = Rs. 1,710
4. Container Charges:
- Number of containers required = 500 kg/100 kg = 5
- Total Container Charges = 5 x Rs. 1,000 = Rs. 5,000
- Credit for Containers Returned = 5 x Rs. 9 = Rs. 45 (assuming all containers are returned within 3 months)
5. Transport Charges:
- Transport Charges per order = Rs. 50 (regardless of the order size)
6. Storage Charges:
- Storage Charges per kg per month = Rs. 15
Total Material Cost for 500 kg:
- Net Price after all discounts = Rs. 1,710
- Container Charges = Rs. 5,000 (assuming no credit for returned containers)
- Transport Charges = Rs. 50
- Storage Charges for 1 month = Rs. 500 (500 kg x Rs. 15 per kg per month)
- Total Material Cost = Rs. 7,260
Rate per kg of Material when Purchasing 500 kg:
- Total Material Cost for 500 kg = Rs. 7,260
- Rate per kg = Total Material Cost / Quantity = Rs. 7,260 / 500 kg = Rs. 14.52 per kg
Explanation of Average Cost Inventory Method - Material Cost:
The Average Cost Inventory Method is a cost accounting method that is used to determine the average cost of inventory items. This method takes into account the total cost of all inventory items and divides it by the total quantity of inventory items to arrive at the average cost per unit. The average cost per unit is then used to value the inventory.
In the case of material cost, the Average Cost Inventory Method can be used to determine the average cost per kg of a material, based on the total cost of all lots purchased and the total quantity of material purchased. This average cost per kg can then be used to value the material inventory.
In the quotation provided, the Lot Price for different quantities of material is given, along with trade discount, cash discount, container charges, transport charges, and storage charges. Using this information, the material cost for a specific quantity of material can be calculated. If the purchaser decides to purchase a different quantity of material, the rate per kg can be calculated using the Average Cost Inventory Method.
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The following quotation is received from is supplier in respect of material xLot price 100kg,500kg and 1000 kg. rate per kg 5,4.50,4.00 trade discount is 20%.cash discount of 5% is allowed if payment is made within 15 days. one container is required for every 100 kg of material and containers are charged at rupees 1000 each but credited at rupees 9 of returned within 3 months.transport charges for any order rupees 50storage charges 15calculate the total material cost for 500 kg and ascertain the rate per kg of the material when the purchaser decides to purchase 500 kgs of the material Related: Average Cost Inventory Method - Material Cost, Cost Accounting?
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The following quotation is received from is supplier in respect of material xLot price 100kg,500kg and 1000 kg. rate per kg 5,4.50,4.00 trade discount is 20%.cash discount of 5% is allowed if payment is made within 15 days. one container is required for every 100 kg of material and containers are charged at rupees 1000 each but credited at rupees 9 of returned within 3 months.transport charges for any order rupees 50storage charges 15calculate the total material cost for 500 kg and ascertain the rate per kg of the material when the purchaser decides to purchase 500 kgs of the material Related: Average Cost Inventory Method - Material Cost, Cost Accounting? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about The following quotation is received from is supplier in respect of material xLot price 100kg,500kg and 1000 kg. rate per kg 5,4.50,4.00 trade discount is 20%.cash discount of 5% is allowed if payment is made within 15 days. one container is required for every 100 kg of material and containers are charged at rupees 1000 each but credited at rupees 9 of returned within 3 months.transport charges for any order rupees 50storage charges 15calculate the total material cost for 500 kg and ascertain the rate per kg of the material when the purchaser decides to purchase 500 kgs of the material Related: Average Cost Inventory Method - Material Cost, Cost Accounting? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The following quotation is received from is supplier in respect of material xLot price 100kg,500kg and 1000 kg. rate per kg 5,4.50,4.00 trade discount is 20%.cash discount of 5% is allowed if payment is made within 15 days. one container is required for every 100 kg of material and containers are charged at rupees 1000 each but credited at rupees 9 of returned within 3 months.transport charges for any order rupees 50storage charges 15calculate the total material cost for 500 kg and ascertain the rate per kg of the material when the purchaser decides to purchase 500 kgs of the material Related: Average Cost Inventory Method - Material Cost, Cost Accounting?.
The following quotation is received from is supplier in respect of material xLot price 100kg,500kg and 1000 kg. rate per kg 5,4.50,4.00 trade discount is 20%.cash discount of 5% is allowed if payment is made within 15 days. one container is required for every 100 kg of material and containers are charged at rupees 1000 each but credited at rupees 9 of returned within 3 months.transport charges for any order rupees 50storage charges 15calculate the total material cost for 500 kg and ascertain the rate per kg of the material when the purchaser decides to purchase 500 kgs of the material Related: Average Cost Inventory Method - Material Cost, Cost Accounting? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about The following quotation is received from is supplier in respect of material xLot price 100kg,500kg and 1000 kg. rate per kg 5,4.50,4.00 trade discount is 20%.cash discount of 5% is allowed if payment is made within 15 days. one container is required for every 100 kg of material and containers are charged at rupees 1000 each but credited at rupees 9 of returned within 3 months.transport charges for any order rupees 50storage charges 15calculate the total material cost for 500 kg and ascertain the rate per kg of the material when the purchaser decides to purchase 500 kgs of the material Related: Average Cost Inventory Method - Material Cost, Cost Accounting? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The following quotation is received from is supplier in respect of material xLot price 100kg,500kg and 1000 kg. rate per kg 5,4.50,4.00 trade discount is 20%.cash discount of 5% is allowed if payment is made within 15 days. one container is required for every 100 kg of material and containers are charged at rupees 1000 each but credited at rupees 9 of returned within 3 months.transport charges for any order rupees 50storage charges 15calculate the total material cost for 500 kg and ascertain the rate per kg of the material when the purchaser decides to purchase 500 kgs of the material Related: Average Cost Inventory Method - Material Cost, Cost Accounting?.
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