Question

A company purchased 130 units for $20 each on January 31. It purchased 190 units for $25 each on February 28. It sold 190 units for $60 each from March 1 through December 31. If the company uses the weighted-average inventory costing method, calculate the amount of Cost of Goods Sold on the income statement for the year ending December 31. (Assume the company uses the perpetual inventory system. Round any intermediate calculations two decimal places, and your final answer to the nearest dollar.)

Answer 1

Weighted Average Cost of Goods per unit = (Jan 31 Purchase + Feb 28 Purchase) / Total Purchases

Weighted Average Cost of Goods per unit = (130 * 20 + 190 * 25) / 320

Weighted Average Cost of Goods per unit = 7350 / 320

Weighted Average Cost of Goods per unit = $22.97

amount of Cost of Goods Sold on the income statement for the year ending December 31 = Sales * Weighted Average Cost of Goods per unit

amount of Cost of Goods Sold on the income statement for the year ending December 31 = 190 * 22.97

amount of Cost of Goods Sold on the income statement for the year ending December 31 = $4364