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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.

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Presentation on theme: "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."— 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 Balance0 03-Jun Purchased500 1.80 05-Jun Purchased300 1.95 07-Jun Issued600 12-Jun Purchased800 2.10 22-Jun Issued700 27-Jun Purchased500 2.25 28-Jun Issued600 Prepare stock valuations using all three methods.

2 Average Cost Balance ReceiptsIssuesUnitsaverage £ AVCO 500 @ 1.80500900 300 @ 1.95300585 8001.861,485 X 600 @ 1.86 = 1116200369 800 @ 2.108001,680 1,0002.0492,049 700 @ 2.049 = 1434300615 500 @ 2.255001,125 8002.1751,740 600 @ 2.175 = 1305200435

3 First in First Out Balance ReceiptsIssuesUnits£ FIFO8001,485 As X 500 @ 1.80900 100 @ 1.95195 6001,0952001.95390 800 @ 2.108002.101,680 1,0002,070 200 @ 1.95390 500 @ 2.101,050 7001,4403002.10630 500 @ 2.255002.251,125 8001,755 300 @ 2.10630 300 @ 2.25675 6001,3052002.25450

4 Last in First Out Balance ReceiptsIssuesUnits£ LIFO8001,485As X 300 @ 1.95585 300 @ 1.80540 6001,125 2001.80360 800 @ 2.108002.101,680 1,0002,040 700 @ 2.101,4702001.80360 1002.10210 300570 500 @ 2.255002.251,125 8001,695 500 @ 2.251,125 100 @ 2.10210 6001,335 2001.80360

5 Summary of effects Summary Charged to productionClosing inventoryTotal £ £ £ AVCO3,8554354,290 FIFO3,8404504,290 LIFO3,9303604,290


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