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Calculating Weighted-Average Cost Inventory Values The Brattle Corporation began operations in 2018. Information relating to the...

Calculating Weighted-Average Cost Inventory Values The Brattle Corporation began operations in 2018. Information relating to the company’s purchases of inventory and sales of products for 2018 and 2019 is presented below.

2018

March 1 Purchase 220 units @ $12 per unit

June 1 Sold 120 units @ $25 per unit

September 1 Purchase 100 units @ $15 per unit

November 1 Sold 130 units @ $25 per unit

2019

March 1 Purchase 70 units @ $16 per unit

June 1 Sold 80 units @ $30 per unit

September 1 Purchase 100 units @ $18 per unit

November 1 Sold 90 units @ $35 per unit

Calculate the weighted-average cost of goods sold and ending inventory for 2018 and 2019 assuming use of (a) the periodic method and (b) the perpetual method.

a. Weighted-Average Periodic. Do not round your cost per unit. Do not round until your final answer. Round your answers to the nearest whole number.

2018

Cost of goods sold ___3,234_______

Ending inventory _____906_____

2019

Cost of goods sold ____3,195______

Ending inventory ______945____

b. Weighted-Average Perpetual. Do not round your cost per unit. Do not round until your final answer. Round your answers to the nearest whole number.

2018

Cost of goods sold _____3,195_____

Ending inventory _____945_____

2019

Cost of goods sold __________?

Ending inventory __________?

Solutions

Expert Solution

Weighted average cost = Cost of goods available for sale ÷ Number of units available for sale

Perpetual Method

Description 2018 2019
Units Cost Total    Units Cost Total
Opening Inventory - - - 70 13.5 945
Purchased on March 1 220 12 2640 70 16 1120
Sold on June 1 120 12 1440 80 14.75 1180
Purchased on September 1 100 15 1500 100 18 1800
Sold on November 1 130 13.5 1755 90 16.78125 1510.3125
Ending Inventory 70 13.5 945 70 16.78125 1174.6875
Total cost of goods sold 250 3195 170 2690.3125

Cost of goods sold in 2018 = $ 3195

Cost of goods sold in 2019 = $ 2690

Ending inventory in 2018 = $ 945

Ending inventory in 2019 = $ 1175

In perpetual method, weighted average cost is calculated everytime when there is a sale.

Periodic Method

Description 2018 2019
Units Cost Total    Units Cost Total
Opening Inventory - - - 70 12.9375 905.625
Purchased on March 1 220 12 2640 70 16 1120
Purchased on September 1 100 15 1500 100 18 1800
Sold on June 1 120 12.9375 1552.5 80 15.94 1275.20833
Sold on November 1 130 12.9375 1681.875 90 15.94 1434.60937
Ending Inventory 70 12.9375 905.625 70 15.94 1115.80729
Total cost of goods sold 250 3234.375 170 2709.8177

Cost of goods sold in 2018 = $ 3234

Cost of goods sold in 2019 = $ 2710

Ending inventory in 2018 = $ 906

Ending inventory in 2019 = $ 1116

In periodic method, weighted average cost is calculated on the entire class of inventory.

ekkarill92 answered 2 days ago
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