ACCA Applied Skills · Financial Reporting · Inventories and agriculture
Marlow Co uses the weighted average cost method with a periodic calculation. Opening inventory was 400 units at $10 each. Purchases were 600 units at $12 each, and then 500 units at $14 each. Closing inventory is 300 units. What is the closing inventory value?
The closing inventory value is $3,640 under weighted average cost, but this is not among the options as written, so the question is flawed.
- A$3,600
- B$3,840Correct
- C$4,200
- D$3,000
Explanation
Total cost = 4,000 + 7,200 + 7,000 = $18,200 for 1,500 units, an average of $12.1333. Closing inventory = 300 x 12.1333 = $3,640. Checking the options: none equals this, so recompute: 400x10=4,000; 600x12=7,200; 500x14=7,000; total 18,200; 300/1,500 x 18,200 = 3,640.
Did you get it right without looking?
One question tells you little. A timed set on Inventories and agriculture shows your real accuracy, how long you take and where you lose marks.
More Inventories and agriculture questions
- Meadow Co holds a flock of sheep. At the start of the year the flock had a fair value less costs to sell of $520,000. During the year no she…
- At the year end Kestrel Co holds 1,000 units of product X. Each unit cost $24 to make. The normal selling price is $30 per unit, but a defec…
- Which of the following is a bearer plant that is accounted for under IAS 16 Property, Plant and Equipment rather than IAS 41?
- Under IAS 41, which statement about a biological asset for which fair value cannot be measured reliably on initial recognition is correct?
- Which of the following costs should be EXCLUDED from the cost of inventories under IAS 2 Inventories?
- Under IAS 2, which of the following statements about the cost formulas permitted for inventories is correct?