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ACCA F3 Inventory – The determination of cost
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thx i niw understand
Please someone help, I don’t understand how the 500 units are used for calculation in the FIFO approach asked in Example 5. Why are we looking for and stop at 500 units?
Hi pretty1,
The question asks to calculate the value of closing inventory. To calculate the number of units for closing inventories, we can say…
Opening Inventory Units + Purchased Units – Sold Units = Closing Inventory Units
300 + (400+400+400) – (500+400+100) = 500 units
Maybe you were thinking of cost of sales: Cost of Sales = Opening Inventory + Purchases – Closing Inventories
Thanks so much
Why does a higher closing inventory lead to a higher profit and lower closing inventory lead to a lower profit? The more units you have in closing inventory the less you sold in the year, thus it should be the more closing inventory the lower the profit. Help me understand.
We are assuming that the sales are the same.
In which case the higher the closing inventory means the lower the cost of what was sold. The lower the cost of sales then the higher the profit.
Thanks.
Thanks Opentuition, Am very, very grateful, you have helped me a great deal
hullos, cant connect… always getting this nagging message: server not found!!!!
Your PC/internet is behind a firewall. contact your internet provider to help you out
5 Dollars for a pen? You need to change a supplier man…
@coolgirl1984, But you don’t know what a wonderful pen it is 馃檪
@johnmoffat, That would only the salesperson say! 馃槈
wow amazing and interesting lecture…… everything has explained very keen and clearly….thnxxxxxx
HI! I have an exam tomorow so pleasee help me quick!
Test Q2: why does the answer include administrative overheads??
Shouldn’t only production costs be included? and here there is only carriage inwards and no other….though I am confused about whether we could include factory plant depreciation…
what is meant by general administrative overheads?
Please Help!
Amazing…. very usefull
a very gud lecture keep up the good work
Hello, I have a similar exercise in Kaplan Exam Kit(exercise 26/page 8):
A. buys and sells inventory during the month of August as follow:
Opening inventory-100 units 2.52/unit
4 August -sales 20 units
8 August-purchases 140 units 2.56/unit
10 August-sales 90 units
18 august Purchases 200 units 2.78/unit
20 August Sales 180 units
The AVCO is calculatedas follows:
100 units*2.52=252
140units*2.56=358
200 units*2.78=556
average cost per unit(252+358+556)/440=2.65
Closing inventory 150*2.65=397.5
The question is if I follow the Kaplan’s way and do the exercise which we have in a lecture the result is completly different.I’m confused and do not know what is correct
Good evening! Could you explain me one thing? I’m confused very much!
Why in FIFO approach do we take not oldest units (300* 12 and 200*12,50), but latest (400*15 and 100*14)?
It’s not the “first-in” units, but last!
I’m waiting for your reply!
@mariazhadan, with FIFO, it is the oldest units that are sold first. This means that the units left are always the newest.
Thank you much……
exellent…lot better explained then in the class
@monik, most certainly
too good
hi this is wonderful the lecture is perfect please keep it up open tuition job well done
THANK U FOR THAT
GREAT
nyc……………well explained
thanks and good explaination . keep it up opentuition people.