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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Inventory, BBP Q6.19
The textbook gives the following the question:
A firm has the following transactions with its product R.
1 Jan opening inventory: nil
1 Feb Buys 10 units at $100 per unit
11 Feb Buys 12 units at $250 per unit
1 Apr Sells 8 units at $400 per unit
1 Aug Buys 6 units at $200 per unit
1 Dec Sells 12 units at $400 per unit
The firm uses AVCO to value its inventory. What is the inventory value at the end of the year?
The answers say it is $2,057.12.
But if I were to do the question the way you have described in the lectures, as well as the BBP textbook, shouldn’t the answer be $2,007.26? I thought that we needed to calculate a new weighted average each time we receive inventory. But the BBP answer seems to be using an accumulated average of all receipts.
I am away from home until Tuesday lunchtime, so please ask again on Tuesday. I think I know what they have done, but I need to check and I don’t have the Revision Kit with me at the moment.