Stock Valuation Methods - Example

Stock Movements Information
Month Quantity Value Unit Cost
No. £ £ £
Opening Stocks 1,000 10,000 10.00
Stock Purchases in January 250 2,375 9.50
March 300 3,000 10.00
May 500 5,500 11.00
July 150 1,800 12.00
October 200 2,100 10.50
December 200 1,900 0.50
Closing Stocks 800
Assume unit standard cost is £10.25
Stock Value under each method
Method Standard FIFO Average
Quantity £ £ £
Closing Stock Value 800 8,200 8,550 8,338
Unit closing stock value 10.25 10.69 10.42
Calculation - FIFO
Purchases in No. @ cost No. £
December 200 @ £9.50 1,900
October 200 @ £10.50 2,100
July 150 @ £12.00 1,800
May (part) 250 @ £11.00 2,750
800 8,550
FIFO Cost 8,550/800 10.42
Calculation - Average
Purchases in No. @ cost No. £
December 200 @ £9.50 1,900
October 200 @ £10.50 2,100
July 150 @ £12.00 1,800
May 500 @ £11.00 5,500
March 300 @ £10.00 3,000
January 250 @ £9.50 2,375
1,600 16,675
Average Cost 16,675/1,600 10.42