Example of lifo, fifo and weighted average method, Cost Accounting

Assignment Help:

Example of LIFO, FIFO and Weighted Average Method

Suppose the following purchases were made in ABC Ltd as like:

Date of purchase     Units purchased              Price/unit

1st January                   500                              100

2nd January                  600                              200

3rd January                   800                              400

Units used on date 4th January are 900. Find out the cost/value of units employed by using of FIFO, LIFO and weighted average.

Required: 

Find out the cost of units employed and the value of the closing stocks by utilizing LIFO and Weighted Average and FIFO.

Solution

1. FIFO

 

Cost of units used

 Date   

Units   

Unit price

Total cost

Jan 1

500     

100

 50,000

Jan 2

400

200

 80,000

 

900

Cost of units used

130,000

Closing stock is valued like:

 

Cost of units used

Date   

Units   

Unit price

Total cost

Jan 1

500     

100

 50,000

Jan 2

400

200

 80,000

 

900

Cost of units used

130,000

2. LIFO

 

Cost of units used

Date   

Units   

Unit price

Total cost

Jan 3

800     

400

 320,000

Jan 2

100

200

   20,000

 

900

Cost of units used

 340,000

                           Closing stock is valued as

Date   

Units   

Unit price

Total cost

Jan 2

   500  

200

 100,000

Jan 1

   500

100

   50,000

 

1,000

Value of closing stocks

 150,000

3. Weighted average

Date                Units                Unit price                    Total Cost of                Issues

0 - 0                900                  257.8                           232,105.20

Closing Stock Valuation = (Goods Available - Goods Issued) x Unit Price =

Unit Price = [500(100) + 600 (200) + 800 (400)]/1,900

=490,000/1,900

= 257.8


Related Discussions:- Example of lifo, fifo and weighted average method

Determine the economic order quantity, A retailer knows the annual demand f...

A retailer knows the annual demand for one of its product is 100,000 units, the ordering costs are £25 per order and the average carrying cost per unit is 35 pence. You are require

Management Acconting, what is the different between Financial accounting an...

what is the different between Financial accounting and management accounting?

#title, compare tradition costing and activity costing methods of overhead...

compare tradition costing and activity costing methods of overheads abpsrption based on production units,labour hourd and machine hours

Required ledgers in financial system, Required Ledgers in Financial System ...

Required Ledgers in Financial System In the financial Systems the Required ledgers are as: The General Ledger Debtors Ledger Creditors Ledger

Advantages of cost accounting, ADVANTAGES OF COST ACCOUNTING 1.        ...

ADVANTAGES OF COST ACCOUNTING 1.         It helps in efficient decision making. 2.         It assists in cost drop. 3.         It is useful in obsession of selling price

Tax depreciation affect the cash flows statement?, What type of activity co...

What type of activity could a company engage in to improve their cash flows in their Cash Flows Statement? Is this ethical? Could borrowing money make the cash from operations be

Accounting for job order costing - direct materials, Accounting for Job Ord...

Accounting for Job Order Costing - Direct Materials Direct materials (i) Dr Stores ledger control Account Cr Cash Account - for cash purchasers              X (ii) D

Analysis of prime cost and overhead variances, You are required to conduct ...

You are required to conduct a detailed analysis of all the prime cost and overhead variances. You must create a fictitious company (and a fictitious cost object) which has at least

Basic earnings per share, What are 'potential' ordinary shares?  In your an...

What are 'potential' ordinary shares?  In your answer provide three examples to support your explanation.  Briefly outline the process (steps) to determine whether 'potential' ordi

Compute the cost of goods sold, The following data (in thousands of dollars...

The following data (in thousands of dollars) have been taken from the accounting records of Barn Burner Corporation for the just completed year.       Sales

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd