Question $3$

Marathon Goods Ltd is a wholesale distribution firm.

The following information relates to the movement in stores of its key product$-$XK$.$

Sales of $1,000$ units @ $20$ per item are recorded for the month.

There is an opening stock of $250$ units, valued at $2,000$ at $1^{st}$ March $2023.$

Required:

$($a$)$ Calculate the gross profit for the month of March $2023$ using each of the following

methods of inventory valuation:

I. FIFO

$(4$ marks$)$

II$.$ LIFO

$(4$ marks$)$

III. Weighted Average

$(6$ marks$)$

$($b$)$ Which inventory $($stock$)$ valuation is most relevant for decision making purposes?

Explain your answer.

$(6$ marks$)$

$($c$)$ XYZ Ltd$.,$ a pen manufacturer, assembles monthly data for the first eight months of

production of its new deluxe pen.

The lowest production occurred in February: $75,000$ pens for a total cost of $125,000.$

August saw the highest production: $100,000$ pens costing $160,000.$

Required:

Use this information to predict the costs for December's production quota of $90,000$

pens.

$(10$ marks$)$

Total $30$ marks