Reference no: EM132558944

Gunasena Ltd is a wholesale books distribution company which has provided you with the following information from stores in relation to a particular product.

Date                            Transactions               Units              Unit Price                Value

                                                                              (Rs)                (Rs)

08/03/2017     Delivery from Manufacturer       1,500         100.00              150,000

12/03/2017    Delivery from Manufacturer        1,100         112.00              123,200

17/03/2017      Issued to sales                    1,400

25/03/2017    Delivery from Manufacturer       1,300            112.00            145,600

27/03/2017          Issued to sales                  1,250

Sales of 2650 units at Rs. 220 per item are recorded for the month.

There is an opening stock of 750 units, valued at Rs. 95.00 at 1st March 2017.

You are required to:

Question a) Calculate the gross profit for the month of March 2017 using each of the following methods of inventory valuation:

i) FIFO

ii) LIFO

iii) Weighted average

Question b) Which inventory valuation above is most relevant for decision making purposes? Explain your answer.