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Unit 5

Sallo14Sallo14 Just JoinedRegistered Posts: 3
HI, I am revising stock valuation chapter and i am a bit confused about how to calculate a weighted average cost when there is a price of selling units provided.
Normally I would use the average price calculated on last transaction, but now I have no clue.
I would appreciate if someone could help me.
Thank u in advance.

Comments

  • MargaMarga Experienced Mentor Registered Posts: 981
    Sallo14 wrote: »
    HI, I am revising stock valuation chapter and i am a bit confused about how to calculate a weighted average cost when there is a price of selling units provided.
    Normally I would use the average price calculated on last transaction, but now I have no clue.
    I would appreciate if someone could help me.
    Thank u in advance.

    Hi

    the AVCO is for calculating the cost per unit of units to be issued and not bought as far as i am concerned? do you mean selling price = price units were brought in?

    If you have

    Qty 100 price total 52000 this means an AVCO of 520 per piece

    Lets say that the next day 100 more are bought in at a price of 540 each , then you have 200 quantity and 52000+540000 = 106000 which would make your AVCO for any unit issued 106000/200= 530


    hope this helps
  • Sallo14Sallo14 Just Joined Registered Posts: 3
    This isn't guite the answer I am looking for. Let me give you an example of my question.

    A business has the following purchases and sales of one of its products during Aprill 2003.

    3/4 purchase 80 units @ 5.20
    9/4 sales 50 unts @ 8.50
    10/4 purchases 100 units @ 5.50
    15/4 sales 50 @ 8.50
    17/4 sales 60 units @ 8.80
    20/4 purchases 100 units @ 5.80
    28/4 sales 70 units @ 8.80

    I have to show the value of the closing stock using weighted average cost.
    Thanks in advance for helping me:)
  • inq80inq80 Settling In Nicely Registered Posts: 15
    Here's my bash at it.... no idea if its right

    date - Purchased - sales - aver.unit cost - units - total cost

    3/4.......80.............................5.20...............80.........416
    9/4..........................(50)......(5.20).............(50).......(260)
    ................................................................30.........156
    10/4......100............................................................550
    ...........................................5.43...............130........706
    15/4........................(50)......(5.43).............(50).......(271.50)
    ................................................................80.........434.40
    17/4........................(60)......(5.43).............(60).......(325.80)
    ................................................................20.........108.60
    20/4......100............................................................580
    ...........................................5.74...............120.......688.60
    28/4........................(70)......(5.74).............(70)......(401.80)
    ...........................................5.74...............50.........287
  • MargaMarga Experienced Mentor Registered Posts: 981
    Sallo14 wrote: »
    This isn't guite the answer I am looking for. Let me give you an example of my question.

    A business has the following purchases and sales of one of its products during Aprill 2003.

    3/4 purchase 80 units @ 5.20
    9/4 sales 50 unts @ 8.50
    10/4 purchases 100 units @ 5.50
    15/4 sales 50 @ 8.50
    17/4 sales 60 units @ 8.80
    20/4 purchases 100 units @ 5.80
    28/4 sales 70 units @ 8.80

    I have to show the value of the closing stock using weighted average cost.
    Thanks in advance for helping me:)

    hi

    are the units price sell that high? 8.50? if you buy 80 @ 5.20 you have £416 but if you sell 50 @8.50 =£425 you dont have enough money to do so or you are in negative?
  • Sallo14Sallo14 Just Joined Registered Posts: 3
    Yes, they are
    I think I just need to ignore the selling price, and do it as i always do, work out AVCO after each transaction.
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