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      Question

      A retailer begins the month with 200 units valued at

      ₹50 per unit. During the month, they purchase 300 units at ₹55 and later 500 units at ₹60. By month-end, they have sold 700 units. Calculate the ending inventory value by weighted average method and FIFO method.
      A WA = ₹16,500; FIFO = ₹18,500 Correct Answer Incorrect Answer
      B WA = ₹17,000; FIFO = ₹17,500 Correct Answer Incorrect Answer
      C WA = ₹16,950; FIFO = ₹18,000 Correct Answer Incorrect Answer
      D WA = ₹16,950; FIFO = ₹16,500 Correct Answer Incorrect Answer
      E WA = ₹18,000; FIFO = ₹16,950 Correct Answer Incorrect Answer

      Solution

      Weighted average -  • Total cost = (200×50)+(300×55)+(500×60) = 10,000+16,500+30,000 = ₹56,500. • Total units = 1,000 → W.A. rate = ₹56.50. • Ending units = 300 → 300×56.50 = ₹16,950. FIFO Method-  Sell oldest first: 200@50 + 300@55 + 200@60 are issued (total 700). Remaining ending inventory is the last 300 units from the ₹60 layer, so Ending inventory = 300 × 60 = ₹18,000.

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