AVCO, LIFO And FIFO

jslutwjslutw Feels At HomePosts: 28Registered
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

Comments

  • PGMPGM Font Of All Knowledge Posts: 1,954Registered
    Try and write an example of each, and we can help point you in the right direction.
  • janwaljanwal Experienced Mentor Posts: 1,189Registered
    jslutw wrote: »
    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

    Hi 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
  • jslutwjslutw Feels At Home Posts: 28Registered
    Date Receipts Issues
    Unit 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
  • Jo ClarkJo Clark Font Of All Knowledge Posts: 2,526Registered
    Hello Jo

    Where is this question from as unfortunately the formatting is a little confusing. Is it a practice paper?

    Thanks.


    JC
    ~ An investment in knowledge always pays the best interest ~
    Benjamin Franklin
  • jslutwjslutw Feels At Home Posts: 28Registered
    Jo Clark wrote: »
    Hello Jo

    Where is this question from as unfortunately the formatting is a little confusing. Is it a practice paper?

    Thanks.


    JC

    sorry yes its the papaer based basic costing paper on here thanks
  • PGMPGM Font Of All Knowledge Posts: 1,954Registered
    Jo Clark wrote: »
    Hello Jo

    Where is this question from as unfortunately the formatting is a little confusing. Is it a practice paper?

    Thanks.


    JC

    I can't make sense of that either.
  • johnnyboy987johnnyboy987 Feels At Home Posts: 36Registered
    Hey,
    I 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
    jadeterry
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