Tutorial Question: FIFO, LIFO, & WA

1 A wholesaler had an opening inventory of 750 units of geronimos valued at £80 each on
1st March.
The following receipts and sales were recorded during March.
4 March Received 180 units at a cost of £85 per unit
18 March Received 90 units at a cost of £90 per unit
24 March Sold 852 units at a price of £110 per unit
Using the weighted average cost method of valuation, what was the cost of geronimos
sold on 24 March? (to the nearest £)
Date of Unit price
receipt Quantity (£) Value
1 March 750 80 60000
4 March 180 85 15300
18 March 90 90 8100
1020 83400

Vaule per unit = 83400/1020 = 81.76

Qty
Date of Issue issued Value £
24 March 852 852 @ 81.76 69659.52

Closing Inventory 168 @ 81.76 13735.68

83395.2

A £35,320
B £38,016
C £38,448
D £69,660
 2 At the beginning of week 10 there were 400 units of component X held in the stores. 160
of these components had been purchased for £5.55 each in week 9 and 240 had been
purchased for £5.91 each in week 8.
On day 3 of week 10 a further 120 components were received into stores at a purchase
cost of £5.96 each.
The only issue of component X occurred on day 4 of week 10, when 150 units were
issued to production.
Using the FIFO valuation method, what was the value of the closing inventory of
component X at the end of week 10?

FIFO

Qty Receipt on Receipt on Receipt

Date of Issue issued Week 8 @ £ Week 9 @ £ on Value £ £
5.91 5.55 Week 10
@ £ 5.96
240 160 120
Day 4 150 (150) 150 @ 5.91 886.5

Closing Inventory 90 160 120 90 @ 5.91 531.9

at week 10 160 @ 5.55 888
120 @ 5.96 715.2 2135.1
Price paid to supplier 3021.6

A £1,980.45
B £2,070.15
C £2,135.10
D £2,200.55

3 A wholesaler had an opening inventory of 330 units of product T valued at £168 each on
1st April.
The following receipts and sales were recorded during April.
4 April Received 180 units at a cost of £174 per unit
18 April Received 90 units at a cost of £186 per unit
24 April Sold 432 units at a price of £220 per unit
Using the LIFO valuation method, what was the gross profit earned from the units sold
on 24 April?
 LIFO
Qty issued Receipt on Receipt on Receipt
Date of Issue 1 April @ £ 4 April @ on Value £ £
168 £174 18 April
@ £186
330 180 90
24 April 432 (162) (180) (90) 90 @ 186 16740
180 @ 174 31320
162 @ 168 27216 75276

Closing
Inventory
At 24 April 168 0 0 168 @ 168 28224
Price paid to 103500
supplier
Gross Profit = Sales – Cost of sales
= 432 @ 220 – 75276
= 95040 – 75276
= 19764
A £16,350
B £18,120
C £18,520
D £19,764