Silect Ltd, a fabric manufacturer, began March with 73 yards of fabric that cost £23 per yard. During the month, Silect made the following purchases:

At 31 March the closing stock consists of 60 yards of fabric.
Required 

1 Determine the closing stock and cost-of-goods-sold amounts for March under

(a) weighted-average cost,

(b) FIFO and

(c) LIFO.

2 Explain why the cost of goods sold is highest under LIFO. Be specific.
3 How much income tax would Silect save during the month by using LIFO versus FIFO? The income tax rate is 40 percent.

Transcribed Image Text:

March 4 12 113 yards @ 27 81 yards @ 29 19 167 yards @ 32 25 44 yards @ 35