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@johnmoffat
Hello.
I’m currently doing my A levels as a private candidate and I’ve been doing past papers. There’s this AVCO question which I’m stuck on. They’ve asked us to calculate the closing inventory at the end of the month.Answer is avco= $31.49
Pls help me. I’ve searched the whole internet to understand it. But I just don’t get the right answer. You’re my last hope!!
What I thought was that you had to divide the total units sold by total price and you’ll get the avg cost. But this way I ain’t getting the right answer. Pls help me!Hi .
To solve avco u have to use that formula…Cost of opening inventory plus cost of purchases
Divided by opening units plus purchased units..
As in this question
It is
16085/520 = $31 per unit avg cost ….
Requirement of question is to find out value of closing inventory ….
Units remaining in inventory are 30
So 31 * 30 = $930 the value of closing Inventory…
…Mariah: In future, if you want me to help then please ask in the Ask the Tutor Forum – this forum is for students to help each other 🙂
Rukhsar Hussain: No – that is not the way. With AVCO you have to deal with each purchase and sale in date order. Your answer is not correct.
Both of you should watch the lecture on Inventory in the Paper F3 section of the website (AVCO is examinable in Paper F3 also) where I go through a very similar example to this one using both FIFO and AVCO.
(It is example 5 on page 60 of the free Paper F3 Lecture Notes, and the lecture that goes with it).thanks for trying to help me out but unfortunately the answer you’ve given is not correct @RukhsarHussain
The correct answer is: 20 * 31.49 = 629.80
And I just don’t know how to get it 🙁I did follow each and every step you mentioned in the video. But I’m still not getting the correct answer. Could you pls solve the question for me, pls? in our book they tell us that there are two ways to calculate avco; perpetual and periodic. And its a 3 marks question on which we don’t have to spend much time.pls help me out
I cannot provide a full answer on here.
However, I don’t know where you got the answer from, but it is not 629.80 whether you use perpetual or periodic (in ACCA it is only ever perpetual). (and it is strange if you have the answer that they do not show the workings)
Also, I have deleted the link to the paper because I now realise it is a website containing pirated material, which is unethical and illegal. Please do not post links to pirated material on this website in future.
Thank you for your response. I guess there might be some mistake in the Mark Scheme they provided. And I didn’t know in ACCA it’s only perpetual. Thanks for informing me.
It was an A Level exam question (May/June 2013). They give the answers to the short questions like this, no explanatory answer which is annoying.
And I’m sorry about the link, I didn’t know that the website contained pirated material. It’s very famous between CIE students for past papers.
I’ll take care about that in future.
Thanks again!
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