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Explain valuation of issues and valuation of returns.
a.) Valuation of issues is a complex process because the material may be issued out of various lots which might have been purchased at various prices. Following methods are used for this purpose:
- First in First out(FIFO)
- Last in First out (LIFO)
- Average Price Method
- Simple Average Method
- Weighted Average Method
- Highest in First out
- Market Price
- Specific Price
- Standard Price
b.) Valuation of returns indicates the material returned by the production department to stores department. This valuation is done on two basis:
- At the same price at which issued
- At the current price of issues
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