(Solved): You have just established a retail company. You are trying to choose an appropriate method for inv ...

You have just established a retail company. You are trying to choose an appropriate method for inventory costing for the accounting policy. Describe and compare the methods of FIFO and AVCO. How does profit change with the application of different methods? What will the inventory valuation task be at the end of each year and why? PART A/2 You have just been recruited as an expert of cost accounting by a manufacturing company. Your employer is uncertain which cost allocation method (absorption costing, variable costing, $$\mathrm{ABC}$$ ) to be applied to measure the cost of a Product. As a specialist, you write a proposal, in which you have to address at least the following issues: choose a Product (it is up to you) that the company manufactures - identify typical costs that incur while manufacturing the Product, and present their cost classification (definition of basic accounting terms is not required) arguments for the method you suggest, including details how you would determine the cost of the Product mentioning the disadvantages of the two you would not suggest is also welcome. The essay has to end up with a straightforward suggestion. Avoid too much of generalization. PART A/3 You have just recruited a new colleague for the field of management accounting. Explain him the difference between a 'standard' and 'budget', and add also the advantages of adopting a standard costing system from the management's perspective (mention concrete problems that a standard costing system - through analysing variances - could reveal within the company. hint: consider material and labour variances) King Limited operates a standard absorption costing system. During last month, it made only one product, the LION2. The following information is known about LION2; Standard cost (for one unit of LION2): Actual results for last month (700 units of LION2 produced and sold) cost (\$) Required: a. Calculate direct material price and usage variances, and the total material variance for the last month. b. Calculate direct labour rate and efficiency variances, and the total labour variance for the last month, c. Suggest possible reasons for these variances.