Question 2 OR (b)
Closing inventory by the weighted average method
4 marks
- Time to write
- About 8 minutes
From an older CBCS paper
Question
Question 2 OR (b) · 4 marksAccording to the Weighted Average Method, calculate the value of closing inventory on March 31, 2019:
| March 01 | (Stock in hand) | 720 units @ ₹ 12 per unit |
| March 05 | Purchases | 9,000 units @ ₹ 13 per unit |
| March 10 | Sold | 7,200 units @ ₹ 15 per unit |
| March 12 | Sold | 1,320 units @ ₹ 18 per unit |
| March 14 | Purchased | 6,000 units @ ₹ 13 per unit |
| March 22 | Sold | 5,400 units @ ₹ 23 per unit |
| March 30 | Purchase returns | 600 units (from the goods purchased on March 14) |
Reworded from the university paper: names and figures differ, the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- calculateFormula first, then the working, then the answer with its unit (₹, %, units).
What the paper leaves open
Weighted average is read as the perpetual (moving) weighted average; the answer states this and shows the periodic weighted average as the other reading. The purchase return comes out of the 14th March lot at its cost.
Write it in this order
- Read the data; note exactly what is asked 1 min
- 1 Running average after each receipt 2 marks 3 min
- 2 Closing inventory, with check 2 marks 3 min
- Check: arithmetic, units (₹, %), final answer underlined 1 min
Try it first. About 8 minutes for 4 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Reading (paper note): the weighted average is recalculated after each receipt (perpetual); the purchase return of 600 units leaves the 14 March lot at ₹13. AS 2 allows the average to be calculated periodically or as each shipment is received; under the perpetual system each issue is costed when it occurs.
| Date | Receipt / issue | Units | Average rate (₹) | Cost of issue (₹) | Balance units | Balance value (₹) |
|---|---|---|---|---|---|---|
| 1 March | Opening @ 12 | 720 | 12.0000 | 720 | 8,640 | |
| 5 March | Purchase @ 13 | 9,000 | 12.9259 | 9,720 | 1,25,640 | |
| 10 March | Issue | 7,200 | 12.9259 | 93,066.67 | 2,520 | 32,573.33 |
| 12 March | Issue | 1,320 | 12.9259 | 17,062.22 | 1,200 | 15,511.11 |
| 14 March | Purchase @ 13 | 6,000 | 12.9877 | 7,200 | 93,511.11 | |
| 22 March | Issue | 5,400 | 12.9877 | 70,133.33 | 1,800 | 23,377.78 |
| 30 March | Return @ 13 | 600 | 1,200 | 15,577.78 | ||
| Cost of goods sold | 1,80,262.22 |
Closing inventory on 31 March 2019 = ₹15,577.78 (1,200 units).
Check: cost available 8,640 + 1,17,000 + 78,000 − 7,800 = 1,95,840 = 1,80,262.22 + 15,577.78.
The other reading (periodic weighted average): 1,95,840 ÷ 15,120 units = ₹12.9524; closing inventory 1,200 × 12.9524 = ₹15,542.86.
Where the 4 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Running average after each receipt | 2 |
| 2 | Closing inventory, with check | 2 |
| Total | 4 |
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