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SEMESTER SPRING 2016
FINANCIAL STATEMENT ANALYSIS (FIN621)
ASSIGNMENT NO. 01
DUE DATE: 19TH JULY, 2016 MARKS: 10
To understand stock valuation methods.
To understand how different inventory valuation methods affect gross profit.
After attempting this assignment, the students would be able to:
Apply stock valuation methods in different practical scenarios.
Analyze how different inventory valuation methods affect gross profit.
ABCD manufacturing company provides semi-finished wooden parts to the furniture businesses. Following are the records of inventory from January to May.
January: Opening inventory of 40 units at a cost of Rs. 3.00 each
February: Bought 20 units at a cost of Rs. 3.60 each
March: Sold 36 units for Rs. 6 each
April: Bought 20 units at a cost of Rs. 3.75 each
May: Sold 25 units for Rs. 6 each
Using the above given information you need to work out:
a) Inventory valuation under FIFO method (3 marks)
b) Inventory valuation under Average Cost (AVCO) methods (3 marks)
c) Gross Profit for the period using above mentioned two inventory valuation methods and answer whether; over the life of a business, total profit remains same or varies as the two inventory valuation methods shows? (3+1 marks)
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IMPORTANT INSTRUCTIONS/ SOLUTION GUIDELINES/ SPECIAL INSTRUCTIONS
BE NEAT IN YOUR PRESENTATION
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RULES FOR MARKING
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Plese discuss assginment
kindly someone plzzzzzzzzz at least try , and discuss important points and suggest in bullets form so that we could finally reach a conculsion.....?????
Brother someone posted this solution ... we can get a little idea & if there's any error in this working we can point out ..
Why they give selling price of issuing? should we ignore this? if not, then how we would calculate FIFO and AVCO? Because Balance amount would be by compiling receipts and issues. Right?
Because they asked to calculate Gross profit..........