(a) Explain the circumstances where a theoretical inventory valuation method may have to be used to value inventory.

(b) A company in the building industry is about to value its inventory of steel bars. It has 5,000 steel bars in inventory on 30 September 2014, all of equal size and quality, which were delivered in lorry loads at 100 steel bars per lorry. During the financial year ended 30 September 2014, the price of steel bars fluctuated, as follows:

Quarter Price per bar October–December £250 January–March £280 April–June £270 July–September £290 Lorry-loads of steel bars delivered during the year were as follows:

Quarter Steel bars used October–December 3,500 January–March 8,000 April–June 9,500 July–September 10,500 Quarter Deliveries October–December 60 January–March 90 April–June 170 July–September 45 Steel bars used on contracts were as follows:

There was no opening inventory of steel bars.
The company values its inventory on the ‘First In First Out’ basis. Calculate the value of its inventory of steel bars at 30 September 2014.