Mama\'s Mexican Meals, Inc., had the following activity for an inventory item du

Question

Mama's Mexican Meals, Inc., had the following activity for an inventory item during June:

Units

Unit

Cost

Beginning inventory

50

$10

Purchase (June 5).

20

16

Purchase (June 15)

30

14

Sale (June 20).

40

Sale (June 25).

20

Purchase (June 30)

10

20

Assuming Mama's uses a periodic weighted average cost flow assumption, cost of goods sold for June would be

a.

$512

b.

$560

c.

$768

d.

$785

Units

Unit

Cost

Beginning inventory

50

$10

Purchase (June 5).

20

16

Purchase (June 15)

30

14

Sale (June 20).

40

Sale (June 25).

20

Purchase (June 30)

10

20

Explanation / Answer

So, average cost per unit

= Total value of opening units and purchases / Total quantity of opening units and purchases

= $1,440 / 110

= $13.09 per unit

= So, value of cost of goods sold

= Quantity sold x Rate

= (40 + 20) x $ 13.09

= $785

So, as per above calculations, option d is the correct option

Calculations A B C = A x B Quantity Rate Value 50 10 500 20 16 320 30 14 420 10 20 200 Total 110 1440

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