AAT Level 4 Budgeting - CBT Assessment 1 section 1.3

Hi,

Just wondering if someone can help me work out:
'Closing finished goods inventory will be valued at the budget production cost per unit'

Thanks!

Answers

  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034
    STEP ONE
    Find the closing finished goods inventory in number of units. It might be given. If not, Opening Inventory of Finished Goods
    + Total Goods Produced
    - Number of units sold
    = Closing Inventory of Finished Goods (units)

    STEP TWO
    Find the total cost of goods produced. This is typically 3 figures
    Material cost of production
    +Labour cost of production
    +Production Overhead
    = Total Production Cost

    STEP THREE
    Find the production cost per unit

    Total Production Cost ...................= Production cost per unit
    Total Goods Produced

    STEP FOUR
    Multiply the Closing Inventory of Finished Goods (units) x Production cost per unit
    = Value of Closing Inventory of Finished Goods

    This is called the FIFO valuation method
    All the cost of the opening inventory is assumed to be part of the cost of goods sold


    Sandy
    [email protected]
    www.sandyhood.com
    Sandy
    [email protected]
    www.sandyhood.com
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