The other question wouldn't by any chance be compare the answers between LIFO and FIFO or Actual would it?
LIFO = balance 5600 units @ 2.25 = £12600
FIFO = balance 5600 units @ 2.16 = £12120
So, hypathetically they are better off by £480 under LIFO exceept that IAS2 doesn't allow LIFO for financial reporting so the figures only any good for management reporting anyway and even then the report that it gives would be misleading.
p.s. edited because chunky fingers struck again!
-- Edited by Shamus on Friday 18th of October 2013 10:33:38 PM
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
7200 of the original 8000 is sold on 13/12 therefore the price is £2.25 per kg.
Did it say in the question somewhere that the stock was FIFO or Actual rather than AVCO?
Kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I may have misunderstood the figure that you are looking for.
My answer assumed that it was the Issue per kg that you were looking for in your answer
For LIFO however I think that what you are actually after is the balance per kg
So...
For LIFO then that would be 4800 @ 2.15 = 10320 + 2400 @ 2.25 = 5400 therefore the issue data is 7200 units = £15720, therefor the average cost per kg would have been £2.18.
The remaining 5600 units were all from the original batch which was at £2.25 per kg so the balance is 5600 @ 2.25 = £12,600
Hope that makes sense,
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
p.s. I said 2.16 in the FIFO calcualation but the actual figure per kg in the balance would be 2.164286
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
It doesn't specify in the question what to use just to complete the entries in the inventory. No it just asks you in question b ' Using the LIFO method, the issue of 7200 kgs to production on 13 December would be valued at a total of ...... Answer 15720
which would fit in with the answer a couple above that came to that figure.
4800 @ 2.15 = 10320 + 2400 @ 2.25 = 5400 therefore the issue data is 7200 units = £15720
I'm pretty sure that we have covered all possible answers for any variant of the question for all possible fields
Costing isn't so bad and eventually it will just click as its all logic and numbers.
There are some really enjoyable questions out there such as the farland bus company and there was an amusement park one as well that I can't remember the name of although if you were interested in giving it a go I could find it for you.
Once you start doing those scenario based questions you will understand why you are doing these excercises and things will start to slot into place.
I do appreciate at the moment though, espechially if you did financial accounting first this side of the fence can seem very different and strange but trust me in that this stuff is easier than financial accounting in that you can apply logic to it.
You just need to be able to focus upon what you are attempting to achieve which from the sound of it is not very clear with this question.
If you don't mind me asking what study text is it that you are working from? There is the off chance that I may have it which would make chatting over the question a little simpler.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thank you Shaun they are AAT practice assessments level 3 costings & revenue.
I have done some of the tasks online and these are task 1, the rest I seem to be getting on ok with up to task 5 but task 1 has just stumped me. I tend to go into a bit of a panic if I don't understand something straight away and as I didn't do level 2 it's a bit daunting.
