2. Average-Cost Method: Periodic Inventory System Assume the following data with
ID: 2431940 • Letter: 2
Question
2.
Average-Cost Method: Periodic Inventory System
Assume the following data with regard to inventory for Vegan Company:
Calculate the cost of ending inventory and cost of goods sold according to the average-cost method under the periodic inventory system. In your calculations round average unit cost to the nearest cent and round your final answers to the nearest dollar.
Average-Cost method
Aug. 1 Inventory 40 units @ $10 per unit $ 400 8 Purchase 50 units @ $11 per unit 550 22 Purchase 35 units @ $12 per unit 420 Goods available for sale 125 units $1,370 Aug. 15 Sale 58 units 28 Sale 25 units Inventory, Aug. 31 42 unitsExplanation / Answer
Under periodic system, Weighted average method is used.
Total number of units available for sale (beginning inventory + purchases) = 40+50+35 = 125
Cost of units available for sale (beginning inventory + purchases) = 400+550+420 = 1,370
Weighted average unit cost = Cost of units available for sale / Number of units available for sale
= 1,370 / 125
= 10.96
Ending inventory in units = 42
Cost of ending inventory = ending inventory in units * 10,96 per unit
= 42 * 10.96 = 460.32
Sales in units = 58+25 = 83
Cost of goods sold = Number of units sold * 10.96 per unit
= 83 * 10.96
= 909.68
Average cost method Cost of ending inventory 460.32 Cost of goods sold 909.68Related Questions
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