Tringo Limited are retailers in wangos and dingos and are considering
changing their stock valuation from FIFO to LIFO.
The following consignments of wangos and dingos have been received
during 1999:
Example 3: (a) (i) Describe three methods of arriving at the cost of stock. (5 marks) (ii) Explain how the cost of a stock of finished goods held by the manufacturer would normally be arrived at when obtaining the figure for the financial statements. ( 6 marks) (b) Doni Limited is a manufacturer of garden furniture. The company has consistently used FIFO (first in, first out) in valuing stock, but it is interested to know the effect on its stock valuation of using LIFO (last in, first out) and AVCO (weighted average cost) instead of FIFO. At 28 February 2000 the company had a stock of 4,000 standard plastic tables and has computed its value on each of the three bases as: During March 2000 the movements are as follows: Received from factory: On a FIFO basis the stock at 31 March 2000 was 32,400. Required: Compute what the value of the stock at 31 March would be using: (a) LIFO (7 marks) (b) AVCO (7 marks) In arriving at the total stock values you should make calculations to two decimal places (where necessary) and deal with each stock movement in date order. (Total 25 marks) Example 3: (a) (i) Describe three methods of arriving at the cost of stock. (5 marks) (ii) Explain how the cost of a stock of finished goods held by the manufacturer would normally be arrived at when obtaining the figure for the financial statements. ( 6 marks) (b) Doni Limited is a manufacturer of garden furniture. The company has consistently used FIFO (first in, first out) in valuing stock, but it is interested to know the effect on its stock valuation of using LIFO (last in, first out) and AVCO (weighted average cost) instead of FIFO. At 28 February 2000 the company had a stock of 4,000 standard plastic tables and has computed its value on each of the three bases as: During March 2000 the movements are as follows: Received from factory: On a FIFO basis the stock at 31 March 2000 was 32,400. Required: Compute what the value of the stock at 31 March would be using: (a) LIFO (7 marks) (b) AVCO (7 marks) In arriving at the total stock values you should make calculations to two decimal places (where necessary) and deal with each stock movement in date order. (Total 25 marks)
