Reference no: EM132558376

Gunasena Ltd is a wholesale books distribution company which has provided you with the following information from stores in relation to a particular product.

Date                         Transactions                             Units               Unit Price                   Value

                                                                                         (Rs)                     (Rs)

08/03/2017 Delivery from Manufacturer                 1,500                 100.00               150,000

12/03/2017 Delivery from Manufacturer                 1,100                 112.00                  123,200

17/03/2017 Issued to sales                                    1,400

25/03/2017 Delivery from Manufacturer                    1,300                  112.00               145,600

27/03/2017 Issued to sales 1,250

Sales of 2650 units at Rs. 220 per item are recorded for the month.

There is an opening stock of 750 units, valued at Rs. 95.00 at 1st March 2017.

You are required to:

Question a) Calculate the gross profit for the month of March 2017 using each of the following methods of inventory valuation:

i) FIFO

ii) LIFO

iii) Weighted average.

Question b) Which inventory valuation above is most relevant for decision making purposes? Explain your answer.