ELtd’s stock purchases during a recent week were as follows:

There was no stock at the beginning of the week. 420 units were issued to production during the week. The company updates its stock records after every transaction.

(a) Using a first in, first out (FIFO) method of costing stock issues, the value of closing stock would be:
A $58.00 C $70.00 B $72.00 D $76.00 (2 marks)

(b) If E Ltd changes to the weighted average method of stock valuation, the effect on closing stock value and on profit compared with the FIFO method will be:
A_ higher closing stock value and higher gross profit;
Blower closing stock value and higher gross profit;
C lower closing stock value and lower gross profit;
D higher closing stock value and lower gross profit.
(2 marks)
CIMA Management Accounting Fundamentals

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Day Price per unit ($) Units purchased 1 1.45 55 2345 2 1.60 80 3 1.75 120 1.80 75 1.90 130