# Fifo

Registered Posts: 24
Hi there,

I just need a bit of help in getting the answers that are listed in the screenshot.

Thanks,

Gareth

• AAT Student, AATQB Posts: 264
Inventory balance 500x20=10000
Inventory purchased
1200x22=26400
2000x21=42000
Issues
1800kg
Fifo method
500x20=10000
1200x22=26400
100x21=2100
Total 1800 kg at a price 38500
Inventory left 500+1200+2000-1800=1900
AAT Level 2. 2018 Distinction
AAT Level 3. 2018 Distinction
AAT Level 4. 2019 FSLC 100% MABU 93% MADC 82% PDSY 80%
• AAT Student, AATQB Posts: 24
Hi Gareth,

The company issues 1800 kilos and since we are using FIFO you start at the beginning...
You can use all of the first 500 kilos
You can use all of the first consignment of 1200 kilos
and 100 kilos of the second consignment, which totals to the 1800 kilos needed for production.
500 x £20 = £10000
1200 x £22 = £26400
100 x £21 = £2100
Total = £38500
You had 3700 kilos in total and you issued 1800 for production so that leaves you with 1900 left.
You used all kilos that cost £20 and £22, the second consignment was priced at £21, you still have 1900 kilos left of that consignment at that price so that is what you price your remaining inventory at.

Hope this helps!
Vickie
AATQB - Studying Level 4
• Registered Posts: 24
Thank you very much for the helpful replies. I have just got one last question, where does the 100 come from?

It just seems to pop up out of nowhere to me. Sorry about all the questions.
• AAT Student, AATQB Posts: 24
Not a problem ! So because you need 1800 kilos for production, the first batch of kilos is only 500, then the second batch is only has 1200, so you need 100 kilos out of the 2000 batch to make it up to 1800, does that make sense?
AATQB - Studying Level 4
• Registered Posts: 24
Ah okay I gotcha. 500 + 1200 = 1700, so it is 100 less from 1800. Nice one!

Cheers