In: Accounting
Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition): |
• | 45 units at $106 |
• | 73 units at $75 |
• | 170 units at $54 |
Sales for the year totaled 265 units, leaving 23 units on hand
at the end of the year. |
Multiple Choice
$1,242.
$1,292.
$2,438.
$1,551.
Answer: $1,551
.
.
Cost of units available for sale = (45 units x $106) + (73 units x $75) + (170 units x $54)
= $4,770 + $5,475 + $9,180
= $19,425
.
Number of units available for sale = 45 units + 73 units + 170 units = 288 units
.
Average cost per unit = Cost of Units available for sale / Number of Units available for sale
= $19,425 / 288 units
= $67.44791666666666…. per unit
.
The value of Ending Inventory = Number of units in Ending Inventory x Average cost per unit
= 23 units x $67.447916666666666
= $1,551.302083333333…..
= $1,551 àrounded to 0 decimal places