# AVCO, LIFO And FIFO

jslutw
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**28**Registered
Hi guys

Need some serious help on these finding it hard to understand and not sure how to do the calculations can someone point me in right direction ta

Jo

Need some serious help on these finding it hard to understand and not sure how to do the calculations can someone point me in right direction ta

Jo

## Comments

1,954Registered1,189RegisteredHi Jo

Don't know if this helps at all but it did for me

http://forums.aat.org.uk/showthread.php?23981-FIFO-LIFO-and-AVCO&highlight=FIFO

Jan

28RegisteredUnit Cost Units Cost

March 5 200 600

March 8 300 1200

March 12 500 2500

March 18

March 25 400 2400

Method Cost of Issue 18 March Closing Stock at 31 March

FIFO

LIFO

AVERAGE

2,526RegisteredWhere is this question from as unfortunately the formatting is a little confusing. Is it a practice paper?

Thanks.

JC

28Registeredsorry yes its the papaer based basic costing paper on here thanks

1,954RegisteredI can't make sense of that either.

36RegisteredI found the question you are talking about - asking to find the cost of issue on March 18 and then the closing stock. https://services.aat.org.uk/servlet/file/BCCG_PQ_14_Dec_2010.doc?ITEM_ENT_ID=129416

Task 2.4

Olsen Ltd has the following movements in a certain type of stock into and out of its stores for the month of March:

Date Receipts Issues

Units Cost Units Cost

March 5 200 £600

March 8 300 £1,200

March 12 500 £2,500

March 18 600

March 25 400 £2,400

To work out the cost of issue for LIFO and FIFO, you could begin by working out the unit price of each receipt of stock. 200 Units for £600 is £3ea. 300 Units for £1200 is 4ea. 500 Unites for £2500 is £5. For cost of issue of stock, you do not take into account stock receipts after the issue.

FIFO (First in Last Out) is about valuing the cost of issue at the earlier purchase price. So you need to use the first 600 units purchased. So, 200 units @ £3a, 300 units @ £4ea & 100 Units @ £5ea gives you a cost of issue of £2300.

LIFO (Last in First Out) is about valuing the cost of issue at the most recent purchase price. So you need to use the last purchase prices first. So, 500 Units @ £5ea & 100 units @ £4ea will give you a cost of issue of stock of £2900.

AVCO (Average Cost) is about valuing stock at the average purchase price. So you take the total value of stocks before the issue, £4300 and divide it by the total number of units, 1000. This gives you an average unit price of £4.30. You just multiply this by the units on the issue, and this will give you the AVCO cost of issue of £2580.

To work out the closing stock value, you first should work out the total of all receipts. Here you add all receipts (including March 25) giving you £6700. From here, to work out the closing stock value, you just take each amount from £6700.

FIFO £6700 - £2300 = £4400

LIFO £6700 - £2900 = £3800

AVCO £6700 - £2580 = £4120

Hope that helps, I had trouble with this, but I got it after LOTS of practice!

Johnny