help ecr fifo and avco

joerd84

hi, can anyone tell me how you'd figure out the stock issue method if the stock record card is only partly completed?

visha

When ever there is a stock card / stock valuation method evaluation question, look at the first issue on the card to find which method was used.

Referring to June 2008 paper you will notice that first stock was issued at £2.9250. (take note here of 4 decimal places

---

very important that you work to 4 decimal places as well)

This can’t be LIFO because the last stock received was at £3.0000

Is it then FIFO? – Calculate the stock price for the balance b/f - £16,800 divide by 6000 kg =£2.8000

Stock was issued at £2.9250 and therefore can not be FIFO. It MUST be AVCO.

Confirm this by dividing the total stock cost by total quantity. £46,800 divide by 16,000 = £2.9250

Now use AVCO method. AVERAGE METHOD

As the name suggests, when ever you issue the stock, use the above formula to find out what the average cost of the stock in the store is. Then issue the stock to production at that price.

joerd84

ah right thanks alot, makes sense now