ECONOMIC ENVIRONMENT

Regulatory and Economic Environment



Regulatory and Economic Environment

UW's forecast accounts for the year ending 30th April 2012:

Without changing stockholding policy or including May sales to China.

 

Y/E April 2012

£000s

Turnover

13,200

Cost of Sales

6,150

Indirect Expenses

3,000

Net Profit

4,050

Changing stockholding policy but excluding sales to China.

 

Y/E April 2012

£000s

Turnover

13,200

Cost of Sales

4,945

Indirect Expenses

3,000

Net Profit

5,255

Units (000s)

Value (£000s)

Per Unit Cost

AVCO

Opening stock

400

3000

7.5

Purchases:

May

200

2000

10

July

100

800

8

September

200

2000

10

December

100

900

9

March

300

2350

7.83

8.72

Closing stock

700

6105.56

8.72

Total

2000

4944.44

2.47

Without changing stockholding policy but including sales to China.

 

Y/E April 2012

£000s

Turnover

15,840

Cost of Sales

7,000

Indirect Expenses

3,000

Net Profit

5,840

Units (000s)

Value (£000s)

Per Unit Cost

Opening stock

400

3000

Purchases:

May

200

2000

July

100

800

8

September

200

2000

10

December

100

900

March

300

2350

China May Sales

120

1000

Closing stock

580

5050

Total

2000

7000

Changing stockholding policy and including sales to China.

 

Y/E April 2012

£000s

Turnover

15,840

Cost of Sales

6,302

Indirect Expenses

3,000

Net Profit

6,538

Units (000s)

Value (£000s)

Per Unit Cost

AVCO

Opening stock

400

3000

7.5

Purchases:

May

200

2000

10

8.75

8.75

July

100

800

8

16.75

8.375

September

200

2000

10

18.375

9.1875

December

100

900

9

18.1875

9.09375

March

300

2350

7.83

16.9271

8.46354

8.77396

China May Sales

120

1052.4

8.77

Closing stock

580

5800

10

Total

2000

6302.4

3.1512

Comment on the validity of the Financial Director's proposed treatment of stock valuation and revenue recognition, referring to relevant International Accounting Standards as appropriate.

Valuation of inventories

When you buy instead of selling goods to sell, purchase is recorded at cost, less the amount of any cash discount received. The cost of the goods including freight costs paid by the purchaser, covered insurance, goods in transit or storage period and taxes. Four of the most widely used methods for valuing inventories end, the specific cost, that of the first in first out (FIFO), the last-in, first out (LIFO) and weighted average. The inventory valuation rule for commercial entities is the cost of acquisition or purchase the sum representing exceptions to be made in the acquisition (Sam, 2010, 34). There will be goods must register for an account of goods in transit for control and information, accumulated their costs until the goods are in storage ready for sale.

Average Cost (AVCO)

This method requires calculating the average unit cost of items in the initial inventory plus purchases made in the reporting period. Based on this average unit cost is determined by both the cost of sales (production) as the final inventory of the period. The average cost represents the arithmetic mean or average obtained by dividing the aggregate amount of the purchase of a commodity, the number of items purchased. For the average cost by dividing the net asset value of the goods in particular the number of units, obtaining an average cost to be used to value both to value inventory as cost of sales (Richard et al, 2010, 44). It values ??the cost of goods sold at a price of ending inventory has two modes of calculation, the weighted average cost and average cost mobile. Weighted average cost is used when the inventory is valued on a periodic basis. The initial inventory and net purchases units are added in amounts and divide and thus obtaining a weighted average cost used to value the units sold. Average cost mobile: when stock is used and the cost of sales will be permanently valued average costs per day, through the perpetual inventory system. The perpetual inventory method for a new average price whenever there is a change or movement in the inventory. Cost of sales should be calculated at the average price that corresponds to the date of operation.

FIFO: First in, first out

It is based on the first items ...