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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › How to calculate FIFO the quick way…….?
Hi John, thanks for your great lectures, they have been massive help and they’ve really cleared up my understanding of a lot of the topics. I’ve got my exam tomorrow so bit nervous about it but I remember you saying a quick way to calculate FIFO is by working out whats left in inventory and multiplying that by the latest price (which makes sense to me). However, maybe I misunderstood it but it didn’t seem to work for the below question:
1 January Purchases 4000 units for $10000
31 January Purchases 1000 units for $2000
15 Feb Sales 3000 units for $13000
28 Feb Purchases 1500 units for $3750
14 Mar Sales 500 units for $1200
Therefore there were 300 units left and I think the price should have been 2.4 (ie 1200/500). However this gives an answer of 7200 but apparently the answer was 7000. Please could I check this with you? Many thanks
There are 3,000 left (not 300).
1,500 must have been bought on 28 Feb and so cost $3750.
The remaining 1,500 cannot have been bought on 28 Feb so we go to the previous purchase. 1,000 of them were therefore bought on 31 Jan and so cost $2,000.
That leaves 500 which must have been bought on 1 Jan and cost 500 x $10,000/4,000 = $1,250
Therefore the total cost = 3750 + 2,000 + 1,250 = $7,000