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 4^th 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 net present value of proposed project, A foreign company plan...

A foreign company plans to clear several dozen acres of ecologically valuable mangrove swamp in Vietnam for the creation of a shrimp aquaculture facility. This decision will creat

Profit an economic profit, Johnson Farms owns valuable farm land that permi...

Johnson Farms owns valuable farm land that permits it to make wheat at a lower cost than its competitors. The company reports large profits every year on its accounting statements.

Trypanosoma, Place a prepared slide of Trypunosoma under tlic microscope an...

Place a prepared slide of Trypunosoma under tlic microscope and focus it under low power, You will observe large number of tiny spindle-shaped trypanosomes lying in the plasma alll

Case study, what could it cost the fezas to launder?show your detailed culc...

what could it cost the fezas to launder?show your detailed culculation

Determine the single limiting factor, Determine the Single Limiting Factor ...

Determine the Single Limiting Factor A company manufactures and sells three products as A, B and C. The unit cost and revenue structure for every product and its maximum forec

Literature review - effectiveness auditing, EFFECTIVENESS AUDITING is one t...

EFFECTIVENESS AUDITING is one type of internal audit. Describe and evaluate this type of internal audit. What types of organisation would it be most useful for? Required: 1)

Basic, sir i

sir i

Cost of salaries, how salaries cause cost?

how salaries cause cost?

Calculate the variable overhead, Questions 8-10 rely on the following data....

Questions 8-10 rely on the following data. FrontGrade Systems allocates manufacturing over- head based on machine hours. Each connector should require 11 machine hours. According t

Prepare the report and explaining the growth, You are a beginner accountant...

You are a beginner accountant with a large accountancy firm and a training day has been organised to update all technical staff on a range of topics across numerous technical disci

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages