UNIVERSITY OF LUSAKA

Material Pricing Methods – FIFO, LIFO and Weighted Average 01.09.16

Z Ltd had the following transactions in one of its raw materials during April 2003:
Opening stock 40 units @ K10,000 each
April 4 bought 140 units @ K11,000 each
April 10 Used 90 units
April 12 Bought 60 units @ K12,000 each
April 13 Used 100 units
April 16 Bought 200 units @ K10,000 each
April 21 Used 70 units
April 23 Used 80 units
April 26 Bought 50 units @ K12,000 each
April 29 Used 60 units

You are required

a) To write up the stores ledger card (table) using
 FIFO,
 LIFO and
 Weighted Average
methods of stock valuation; (12 marks)
b) To state the cost of material used for each system during April; ( 2 marks)

FIFO

RECEIPTS UNIT TOTAL ISSUES ISSUE AMOUNT BALANCE STOCK

(units) PRICE COST (units) PRICE IN UNITS VALUE

Opening 40 K10,000 K400,000 40 K400,000

stock
April 4 140 K11,000 K1,540,000 180 K1,940,000
10 90 40xK10000 K950,000 90xK11,000 K990,000
50xK11000
12 60 K12,000 K720,000 90xK11,000 K1,710,000
60xK12000
13 100 90xK11,000 K1,110,000 50xK12,000 K600,000
10xK12,000
16 200 K10,000 K2,000,000 50xK12,000 K2,600,000
200xK10,000
21 70 50xK12,000 K800,000 180xK10,000 K1,800,000
20xK10,000
23 80 80xK10,000 K800,000 100xK10,000 K1,000,000
26 50 K12,000 K600,000 100xK10,000 K1,600,000
50xK12,000
29 60 60xK10,000 K600,000 40xK10,000 K1,000,000
50xK12,000

Therefore the cost of material used for under FIFO is K4,260,000.00.

 LIFO

RECEIPTS UNIT TOTAL ISSUES ISSUE AMOUNT BALANCE STOCK

(units) PRICE COST (units) PRICE IN UNITS VALUE

Opening 40 K10,000 K400,000 40 K400,000

stock
April 4 140 K11,000 K1,540,000 40 K 400,000
140 K 1,540,000
10 90 90xK11,000 K990,000 40xK10,000 K 400,000
50xK11,000 K 550,000
12 60 K12,000 K720,000 40xK10,000 K 400,000
50xK11,000 K 550,000
60xK12000 K 720,000
13 100 60xK12,000 K1,160,000 40xK10,000 K400,000
40xK11,000 10x K11,000 K110,000
16 200 K10,000 K2,000,000 40xK10,000 K400,000
10xK11,000 K110,000
200xK10,000 K2,000,000
21 70 70xK10,000 K700,000 40xK10,000 K400,000
10xK11,000 K110,000
130xK10,000 K1,300,000
23 80 80xK10,000 K800,000 40xK10,000 K400,000
10xK11,000 K110,000
50xK10,000 K500,000
26 50 K12,000 K600,000 40xK10,000 K400,000
10xK11,000 K110,000
50xK10,000 K500,000
50xK12,000 K600,000
29 60 50xK12,000 K700,000 40xK10,000 K400,000
10xK10,000 10xK11,000 K110,000
40xK10,000 K400,000

Therefore the cost of material used for under LIFO K4,350,000

 Weighted Average

RECEIPTS UNIT TOTAL ISSUES ISSUE AMOUNT BALANCE STOCK

(units) PRICE COST (units) PRICE IN UNITS VALUE

Opening 40 K10,000 K400,000 40 K400,000

stock
April 4 140 K11,000 K1,540,000 180 K1,940,000
10 90 K10,778 K970,000 90xK10,778 K970,000
(1,940,000/
180)
12 60 K12,000 K720,000 90xK10,778 K1,690,000
60xK12000
13 100 K11,267 K1,126,700 50xK11,267 K563,400
(1,690,000/
150)
16 200 K10,000 K2,000,000 50xK11,267 K2,563,400
200xK10,000
21 70 K10,254 K717,800 180xK10,254 K1,845,700
(2,563,400/
250)
23 80 K10,254 K820,300 100xK10,254 K1,025,400

26 50 K12,000 K600,000 100xK10,254 K1,625,400

50xK12,000
29 60 K10,836 K650,100 90xK10,835 K975,200
(1,625,400/
150)

The cost of materials used under Weighted average is K4,284,900