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8 October, 08:57

Chess Top uses the periodic inventory system. For the current month, the beginning inventory consisted of 360 units that cost $65 each. During the month, the company made two purchases: 540 units at $68 each and 270 units at $70 each. Chess Top also sold 900 units during the month. Using the average cost method, what is the amount of ending inventory

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  1. 8 October, 08:59
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    Using the average cost method, the amount of ending inventory is $ 18,235.50

    Explanation:

    Chess Top

    Periodic inventory system

    For the current month,

    Units Unit Cost Total

    Beginning inventory 360 $65 23400

    Purchases: 540 units $68 36720

    Purchases 270 units $70 18900

    Total 1170 79020

    We add the total units and total cost of the units and then divide the total cost by the total number of units to get the average cost per unit.

    Average Cost = Total Cost / Total Units

    = 79020/1170 = $ 67.54 per unit

    Sales 900 units (given)

    Ending Inventory = Total Units Less Sales

    Ending Inventory = 1170 - 900 = 270 units

    Average Cost of Ending Inventory = 270 units * $ 67.54 = $ 18,235.50
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Home » Business » Chess Top uses the periodic inventory system. For the current month, the beginning inventory consisted of 360 units that cost $65 each. During the month, the company made two purchases: 540 units at $68 each and 270 units at $70 each.
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