[Q costs and Revenues] for some reason can not work out this AVCO question :S

topcat

Hi,

Trying to do part B the correct answer is £61,333.33 but i keep getting £73905.88235 looked at it for 30 minutes now it is driving me mad :cursing:

These are my workings:

104,700/34,000 = £3.079411765 per unit

Issues 10,000kg

therefore £3.079411765 per unit * 10,000 = £30794.11765

£104700 - £30794.11765 = £73,905.88235

which leaves me with me the remaining balance of 24,000kg at a total cost of £73,905.88235


can not get £61.333.33 correct answer what am i doing wrong please?

Fresh pair of eyes is very needed and appreciated

Thank you !

Nps

Hi,

Look at the date in the question! It's asking for the value after the first issue, not at the end. (I admit I just did the same!)

After the 3 dec receipt we have 30,000 kg at a total cost of £92,000.

The 14 Dec issue of 10000kg is charged at £30666.667 (92000/30000 * 10000), leaving you with £61333.333 worth of inventory (92000-30666.667 or alternatively 92000/30000 * 20000)

topcat

Nps1976 wrote: »

Hi,

Look at the date in the question! It's asking for the value after the first issue, not at the end. (I admit I just did the same!)

After the 3 dec receipt we have 30,000 kg at a total cost of £92,000.

The 14 Dec issue of 10000kg is charged at £30666.667 (92000/30000 * 10000), leaving you with £61333.333 worth of inventory (92000-30666.667 or alternatively 92000/30000 * 20000)

Thank you ! the question is worded very confusingly (in my mind anyway)

i can stop being frustrated with this one now :001_smile:

Nps

No, they're just making sure you read the question. I'll be the first to admit, I skim read it and missed the date first time - my own fault and exactly what they were testing.

topcat

Think what is confusing me is the "inventory remaining after the issue of inventory on 14th December" this to me would mean after the issue of 10,000kg total cost £30,000 on the 14th

think i am going to have to come back and read this again tomorrow see if the mud clears then , my brain is getting frazzled

Nps

It does mean that, but you've had an extra delivery of stock so the total cost is no longer £30,000. If you were using the FIFO method then the 10,000 issued would be the £30,000 stock, but you're using AVCO in this part of the question so the issued goods are a mixture of the delivery and the opening balance.

Go have some lunch and I bet it all clicks afterwards.

topcat

i dont know what was in those sandwiches but everything is clear now , from this i have learn t i need to eat more sandwiches !

Nps

I find copious amounts of chocolate works well too!

omega man

Guinness!!!!!

Jo Clark

a good nights sleep! :001_tongue:

topcat

Just waiting for the person to come out with a pint of straight vodka