Inventory records for Water Incorporated revealed the following: Date Transaction Number of Units Unit Cost July 1 Beginning inventory 570 $ 2.49 July 25 Purchase 420 2.69 Water Inc. sold 630 units of inventory during the month. Ending inventory assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimal places and final answer to the nearest dollar amount.) Multiple Choice $1,027. $932. $895. $927.

Question

Nicole Bender

Business

9 November, 14:23

Inventory records for Water Incorporated revealed the following: Date Transaction Number of Units Unit Cost July 1 Beginning inventory 570 $ 2.49 July 25 Purchase 420 2.69 Water Inc. sold 630 units of inventory during the month. Ending inventory assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimal places and final answer to the nearest dollar amount.) Multiple Choice $1,027. $932. $895. $927.

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Carter Franco · Answer 1

Value of closing inventory = $925.2

Explanation:

To value inventory, The weighted average inventory method uses the value of weighted average price of all the batches purchased till date. The weighted average price is re-computed whenever a new batch of stock is received.

The average cost per unit = Total cost of quantities purchased / total units available til date

Weighted average cost

= ((570*2.49) + (420 * 2.69)) / (570 + 420)

=$2.57

Closing inventory = opening inventory + purchases - sales

Closing inventory = 570+420 - 630 = 360

The value of the closing inventory = 2.57 * 360 = $925.2

Value of closing inventory = $925.2