Noise Makers Inc. has the following inventory dа ta: July 1 Beginning inventory 30 units at $19 $ 570 7 Purchases 105 units at $20 2,100 22 Purchases 15 units at $22 330 $3,000 A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand. Using the average cost method, the value of ending inventory is

Question

Jayson Palmer

Business

10 March, 03:50

Noise Makers Inc. has the following inventory dа ta: July 1 Beginning inventory 30 units at $19 $ 570 7 Purchases 105 units at $20 2,100 22 Purchases 15 units at $22 330 $3,000 A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand. Using the average cost method, the value of ending inventory is

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Answers (1)

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Karter Butler · Answer 1

The value of ending inventory is $1,910.4

Explanation:

In this question, we are asked to calculate the value of ending inventory, using the average cost method.

According to its name, what the average cost method does is to assign a cost to an inventory item by dividing the total cost of the inventory items by the number of inventory items.

Mathematically, we use the method to solve this particular question at hand as follows;

this

Average cost per unit = (Cost of beginning inventory + Cost of inventory purchased) / (beginning inventory + inventory purchased)

Average cost per unit = (570+2,100+330) / (30+105+15) = 5970/150 = 39.8 per unit

Value of ending inventory = $39.8 * 48 = $1,910.4