What are the definitions of cost, variable cost, prime cost, inventory control, and economic order quantity, and how are they applied in inventory management using the FIFO method?

• From July 1: $200 \text{ units} \times \text{D } 2.50 = \text{D } 500$
• From July 5: $400 \text{ units} \times \text{D } 3.00 = \text{D } 1,200$
• Total units available = $200 + 400 = 600 \text{ units}$

The FIFO method assumes the first units purchased are the first ones issued.

• Issue 400 units:
  • First, take 200 units from July 1 stock: $200 \text{ units} \times \text{D } 2.50 = \text{D } 500$
  • Remaining units to issue: $400 - 200 = 200 \text{ units}$
  • Next, take 200 units from July 5 stock: $200 \text{ units} \times \text{D } 3.00 = \text{D } 600$
• Total cost of issues = $\text{D } 500 + \text{D } 600 = \text{D } 1,100$

• Total units available = 600 units
• Units issued = 400 units
• Closing units = $600 - 400 = 200 \text{ units}$
• Since 200 units from July 1 and 200 units from July 5 were issued, the remaining 200 units in closing stock must be from the latest receipt, which is the July 5 stock.
• Value of closing stock = $200 \text{ units} \times \text{D } 3.00 = \text{D } 600$