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21 October, 16:53

Use the weighted-average inventory method for the following problem: The beginning inventory on August 1 has two items that are valued at $100 each. On August 8, three items were purchased at $250 per unit. On August 15, three units were sold. On August 25, three units were purchased for $275 each. What is the average cost of units in this inventory

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  1. 21 October, 17:37
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    Average cost units in inventory=$1,205

    Explanation:

    August 8

    Weighted average cost in August 8

    = ((2 * 100) + (3 * 250)) / 5=$190

    Cost of goods sold in August 15 = 190 * 3 = 570

    Balance in inventory in August 15 = 950 - 570 = 380

    Weighted average cost in August 25 = 380 + (3 * 275) / (2+3) = 241 per

    Average cost of units = $241 per unit

    Average cost units in inventory in August 25 = $241*5 = 1205

    Average cost units in inventory=$1,205
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