Question

Assume Hadley Co has the following purchases of inventory during the first month of operations

	Number of Units	Cost per unit
First Purchase	310	3.3
Second Purchase	200	3.8

Assuming Hadley sells 300 units at $11 each, what is the cost of goods sold if weighted average is used?

Answer 1

Cost of goods sold = $1,049 or $1048 depending on round off of Intermediate calculation

Working

	Units	Cost per unit	value
Beginning Balance			$ 0
Purchases
	310	$                     3.30	$ 1,023
	200	$                     3.80	$ 760
Cost of goods available for sale	510		$ 1,783

.

Average Cost of Inventory
Units	(A)	510
Total Cost	(B)	$ 1,783
Average Cost	(C=B/A)	$                     3.50

.

Weighted Average method
Total Units Available for sale		510
Units Sold		300
Closing Stock in Units		210
Valuation
Ending Inventory	210	@	$ 3.50	$                  734
Value Of Ending Inventory				$                  734
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$              1,049