Multiple Choice Questions on Data regarding inventory of a particular item of usage in the production activities of an organizati........... for UPSC EPFO Exam Preparation

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Multiple Choice Questions

Data regarding inventory of a particular item of usage in the production activities of an organizati...........

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    Data regarding inventory of a particular item of usage in the production activities of an organization are: the quantity in stock is 1500 units and the value of this stock is Rs.1,27,500. (This works out to an average unit cost of 85.) During the ensuing year X, an additional 300 units are purchased at a unit cost of Rs.95. Consumption in production processes during the year X has been 600 units.

    Working by the First-In-First-Out basis, the value of the residual inventory of the item at the end of the year X will be

     

    This questions was previously asked in
    EPFO APFC (2015)
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    Rs.1,00,000
     

    Incorrect Answer

    Rs.1,02,500
     

    Incorrect Answer

    Rs.1,05,000
     

    Correct Answer

    Rs.1,07,500
     

    Incorrect Answer
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    Explanation:

    To find the value of the residual inventory using FIFO:

    - Initial Inventory:

    - Quantity: 1,500 units at Rs 85 each

    - Purchases during Year X:

    - Additional 300 units at Rs 95 each

    - Total Inventory at Start of Year X:

    - 1,800 units (1,500 + 300)

    - Consumption during Year X:

    - 600 units

    - FIFO Calculation:

    - First consume 1,500 units at Rs 85: 600 units from these are consumed, 900 units remain.

    - No need to touch the 300 units at Rs 95 yet.

    - Value of Remaining Inventory:

    - 900 units at Rs 85 = Rs 76,500

    - 300 units at Rs 95 = Rs 28,500

    - Total: Rs 76,500 + Rs 28,500 = Rs 1,05,000

    Correct Answer: Option:3 i.e.Rs.1,05,000

    By: Udit Singla
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