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AVCO, FIFO and LIFO Examples

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Presentation on theme: "AVCO, FIFO and LIFO Examples"— Presentation transcript:

1 AVCO, FIFO and LIFO Examples
Your company values stock on the FIFO basis. However, the production manager has heard that other methods exist. He asks you to provide valuations on a sample of stock purchased and issued in June using the three methods of FIFO, AVCO and LIFO. Sample stock - widgets Stock movement - June Units Cost (£) 01-Jun Balance 0 03-Jun Purchased 05-Jun Purchased 07-Jun Issued 600 12-Jun Purchased 22-Jun Issued 700 27-Jun Purchased 28-Jun Issued 600 Prepare stock valuations using all three methods.

2 Average Cost Balance Receipts Issues Units average £ AVCO
,485 X = ,680 1, ,049 = ,125 , =

3 First in First Out Balance Receipts Issues Units £ FIFO 800 1,485 As X
600 1, ,680 1,000 2,070 ,050 700 1, ,125 800 1,755 600 1,

4 Last in First Out Balance Receipts Issues Units £ LIFO 800 1,485 As X
600 1,125 ,680 1,000 2,040 , ,125 800 1,695 ,125 600 1,335

5 Summary of effects Summary
Charged to production Closing inventory Total £ £ £ AVCO 3, ,290 FIFO 3, ,290 LIFO 3, ,290


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