E Ltd’s stock purchases during a recent week were as following:
|
Day |
Price per unit($) |
Units purchased |
|
1 |
1.45 |
55 |
|
2 |
1.60 |
80 |
|
3 |
1.75 |
120 |
|
4 |
1.80 |
75 |
|
5 |
1.90 |
130 |
There was no stock at the beginning of the week. 420 units were issued to production during the week. The company updates its stock records after every transaction.
(a) Using a first in, first out (FIFO) method of costing stock issues, the value of closing stock would be:
(b) If E Ltd changes to the weighted average method of stock valuation, the effect on closing stock value and on profit compared with the FIFO method will be
A Higher closing stock value and higher gross profit
B Lower closing stock value and higher gross profit
C Lower closing stock value and lower gross profit
D Higher closing stock value and lower gross profit