The following scenario will be used for the next three questions. Thorin Corp. b

Question

The following scenario will be used for the next three questions. Thorin Corp. began operations in 2017. It is a merchandiser of a single item - Product Q and he Periodic Inventory method. The following relates to purchases of Product Q during 2017: Date Units 400 300 600 300 300 100 2,000 Cost Per Unit $12 $20 $24 $28 $32 $36 Total Cost $4,800 $6,000 $14,400 $8,400 $9,600 $3,600 $46,8000 1/02/17 6/25/17 10/16/17 12/16/17 Goods available for sale At 12/31/17, a physical inventory indicted 420 units of Product Q on hand.

Explanation / Answer

`CALCULATION OF AVERAGE COST OF INVENTORY Average inventory Cost = Total Cost / No. of units Average inventory Cost = $ 46,800 / 2000 units Average inventory Cost = $ 23.40 Per unit Value of the Closing inventory = No. of units in hand X Average Cost per unit Value of the Closing inventory = 420 units X $ 23.40 = $                                    9,828 Answer = Option 3 = $ 9,828

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