CSTR Sample Assessment 1 Task 1 FIFO Question

AbbySpence

I am really struggling on how to work out this question 1 (a). Please can someone give me a breakdown on how they would work it out in an exam situation? Im tearing my hair out!! Thankyou

AbbySpence

The URL for the answer sheet is attached, Thanks

N4T

http://i66.tinypic.com/2cwr91i.jpg

I Hope you can see the image. I can't see your URL for the answer sheet so hope this is the correct question.

This is how I approached these valuation questions in the exams, basically I would draw out the table. It may seem long winded and time consuming but it will keep everything clear.

I have added a cost per kg in the balance column. Also your answer on the computer requires the totals only, but on the workings I am keeping the stock separate as they enter into the pool - this is important and help you keep track of which stock must be used first.

The issue on 13 Dec of 7200kg. We need to use the stock from the 8000 kg brought forward on 1 Dec (highlighted in yellow). We have to assume that it is at £2.25 (£18000/8000kg). In the balance column 800kg remains from the 8000kg at £2.25....plus the 4800kg at £2.15.

Add the purchase of 12000kg to the balance column to the end.

On 27 Dec the 4800kg will be issued. Use up the 800kg at £2.25 first (highlighted in pink) the remaining 4000kg will be taken from 4800kg at £2.15 (highlighted in blue)

FIFO you take from the top working down in order - Stock entering the pool first is used first.

I hope this helped. Let me know if anything is unclear.

AbbySpence

Thank you so much for your response, this makes complete sense when you see it laid out like that, you are my saviour!!!!