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

Variance, What is a standard and acceptable variance

What is a standard and acceptable variance

Marginal costing and differential costing, MARGINAL COSTING AND DIFFERENTIA...

MARGINAL COSTING AND DIFFERENTIAL COSTING 1. Differential costing can be used both in case of marginal costing and absorption costing. 2. In case of marginal costing

Overhead variances, Overhead Variances This explains how the variable ...

Overhead Variances This explains how the variable overhead total variance and the fixed overhead total variances calculated. You can recall the overheads refer to production c

Cost sheet, what is a cost sheet? what are its advantages?

what is a cost sheet? what are its advantages?

Determine opportunity costs, Determine Opportunity Costs A company has...

Determine Opportunity Costs A company has material B in stock that originally cost Shs. 5000 for the 1000 Kshs in stores. The material is missing over from an old purchase ord

Calculate cost of goods sold under throughput costing, The follow data rela...

The follow data relates ot year 20XX for Plano Manufacturing Company: Units produced - 2,000 Units sold - 1,800 Selling price - $200 / per unit Direct material costs - $80,000 Dir

Analysis of fund flow and cash flow statements, After you have studied this...

After you have studied this section, you should be capable to: know the idea of funds flowing by a business in a dynamic situation understand the role of working capital

Interest rates and adjust rates, The Federal Reserve adjusts short term int...

The Federal Reserve adjusts short term interest rates based upon their perceptions of the needs in the economy. Please describe the ways the Federal Reserve can influence interest

You should be willing to pay the worker , You are the manager of a firm tha...

You are the manager of a firm that sells output at a price of $40 per unit. You are interested in hiring a new worker who will increase your firm's output by 2,000 units per year.

Determine firms short run cost curve, Q. A firm uses capital and labor to p...

Q. A firm uses capital and labor to produce a single output good. The production function is given by F(K, L) = K 2 L where K is the amount of capital and L is the amount of labo

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages