Trimvalue Ltd is a wholesale distribution firm which has provided you with the following information from stores in relation to a particular product line – CRIS20
Units Unit Price Value 08/3/12 Delivery from Manufacturer 500 10.00 €/£5,000 12/3/12 Delivery from Manufacturer 100 11.20 €/£1,120 17/3/12 Issued to sales 400 25/3/12 Delivery from Manufacturer 300 11.50 €/£3,450 27/3/12 Issued to sales 250
Sales of 650 units @ €/£20 per item are recorded for the month. There is an opening stock of 250 units, valued at €/£2,000 at 1st March 2012.
Requirement
(a) Calculate the gross profit for the month of March 2012 using each of the following methods of inventory valuation:
(i) FIFO (ii) LIFO (iii) Weighted average.
14 Marks
(b) Which inventory valuation is most relevant for decision making purposes. Explain your answer.
