AVCO
taralouise
Registered Posts: 16
Hi everyone...
I am having a little trouble working out the closing inventory for AVCO.
An example question below.
Units
1500 and the cost is £3000
1600 and the cost is £3520
1900 and the cost is £4275
4000 units issued
The total of units come to 5000 and the total cost is 10795 so dividing these by each other gives me 2.159 x units issued 4000 = £8636 which is the cost of issue.
Now, where to go from here to work out the closing inventory.... any help is much appreciated!
Thanks
I am having a little trouble working out the closing inventory for AVCO.
An example question below.
Units
1500 and the cost is £3000
1600 and the cost is £3520
1900 and the cost is £4275
4000 units issued
The total of units come to 5000 and the total cost is 10795 so dividing these by each other gives me 2.159 x units issued 4000 = £8636 which is the cost of issue.
Now, where to go from here to work out the closing inventory.... any help is much appreciated!
Thanks
0
Comments

It has still got to be 2.159 as it is average cost.
To check....1000 units left costing £10795£8636 = £2159........therefore closing inventory 1000 units @ £2159/1000 units = £2.159 per unit0 
Hi thank you for the above... sorry, I missed out the other part of the question.
After the 4000 issue there is further receipts for 1000 units and the cost is £2750 and it asks what the closing inventory is.
Hope you can help0 
Balance after the issue 1000 units at total cost £2159
Receipts of 1000 units at total cost £2750
Now do what you did as before and add these together...
Closing inventory 2000 units at total cost £4909
If it's asked for, £4909/2000 = £2.4545 per unit
It's that simple, AVCO is the easiest one of the three as you don't need to put the figures in a table to work it out.
1 
Brilliant! Thank you for this, reckon ive got it now0
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