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Inventory, BBP Q6.19

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Inventory, BBP Q6.19

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
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  • May 13, 2017 at 4:32 pm #386092
    janelou
    Member
    • Topics: 15
    • Replies: 10
    • ☆

    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.

    May 13, 2017 at 9:46 pm #386138
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54665
    • ☆☆☆☆☆

    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.

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  • The topic ‘Inventory, BBP Q6.19’ is closed to new replies.

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