Question

Bhakti Ltd provides you the following information in relation to the year 2016-17 Opening Stock(units) Value for 2016-17 Rs25000 100 Production (units) ? Fixed Cost Rs 1lacs Variable Cost 120000 Sales(units) 1900 Selling price (Rs/ per unit) 500 Closing Stock( units) 200 Calculate the value of closing stock using – a. FIFO basis b. LIFO basis

Answer 1

Closing stock value usinf FIFO	22000	(200*110)
Closing stock value usinf LIFO	36000	(250*100+100*110)

Explanation:

Cost during the period	Amount (Rs)
Fixed Cost	100000
Variable Cost	120000
Total Cost	220000

Sales Units	1900
Add: Closing Stock	200
Less: Inventory in the beginning	100 units
No of units produced	2000	units

Cost of 100 units in the beginning	Rs 25000
Cost per unit in the beginning	250	(25000/100)
Cost of 2000 units	220000
Cost per unit of units produced	110	(220000/2000)

Under FIFO method units which are first come into to the stock is issued for production So, out of 1900 units sold , 100 units will be from opening stock and remaining 1800 units from the units produced during the year. Hence , closing stock include the units from current production

Under LIFO method units which have last come into to the stock is issued for production So, out of 1900 units sold , 1900 units will be from units from the units produced during the year. Hence , closing stock include the 100 units from current production and 100 units from the opening stock